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Returned, as-new goods end up as trash

Ajit Niranjan
February 7, 2020

Destruction of packages sent back to e-commerce giants is just one part of a poorly researched problem. An estimated €7 billion worth of goods are destroyed each year in Germany alone.

Goods on shelves
Image: picture-alliance/Keystone/J. Zick

Retailers in Europe destroy usable wares including clothes and electronics worth billions of euros each year, alarming lawmakers trying to rein in waste and shrink carbon footprints as shoppers move online.

France, the first country to end the binning of edible food, voted last week to extend its waste ban to textiles and other consumer goods starting from the end of next year. German Environment Minister Svenja Schulze has said she wants to end the "mere destruction of new goods" with an update to the country's circular economy law that will be voted on in coming months.

Environment ministries in both countries have been spurred into action by media reports of usable goods being burned by fashion companies such as H&M and Burberry and destroyed in warehouses of online platforms that sell third-party goods such as Amazon, Zalando and Otto. The regulatory push is part of a growing backlash against fast fashion and free returns policies that do not price in costs to the climate.

Read more: Zara's fast-fashion problem in focus

"This economic model overproduces goods that are not useful to anyone — and instead of reselling, they destroy," said Alma Dufour, overconsumption campaigner at Les Amis de la Terre in France. "It's ecological nonsense."

Yet even as governments in some countries step up efforts to tackle retail waste, Europe's environmentalists face an accounting obstacle: Big companies don't have to disclose how much gets trashed.

Black Friday In Molfetta
Image: picture-alliance/NurPhoto/D. Pischettola
Poland climate action day
Schoolchildren across the world protested climate inaction on Black FridayImage: Reuters/K. Pempel

Data hard to come by

There are no EU-wide estimates of the quantity of consumer goods destroyed each year, but the French and German governments have recently cited estimates as widely different as €630 million ($689 million) in France in 2014 and €7 billion in Germany in 2010.

The studies, which estimate the percentage of different types of goods destroyed and apply these to official production data, rely on industry surveys rather than counting first-hand the burning or binning of goods. A lack of public accounting makes it near-impossible to verify.

Adding to the confusion, the French government website values it at €800 million, while the ecology ministry website says €630 million.

But the true figure could be much higher.

Workers at a Zalando warehouse are preparing packages
It's estimated that €7 billion worth of goods are destroyed each year in Germany alone — the real figure could be much higherImage: picture-alliance/dpa/M. Schutt

The German study, from Boston Consulting Group (BCG) in 2010, underestimates the rate at which products drop out of the supply chain and doesn't account for imported goods, said Juliane Kronen, study author and founder of German social enterprise innatura. "The insufficiency of this figure [of €7 billion] is that it's way too conservative. But... nobody else has any other figures."

Little transparency

Large online retailers have come under scrutiny as customers have moved more of their shopping online and sent packages of unwanted goods in greater numbers back to the sender. About 70% of these returned articles are sold good-as-new, a survey of German, Austrian and Swiss firms from the EHI retail institute found last year. There is little transparency about what happens to the remaining 30%.

What's more, said Kronen, public pressure around the circular economy has so far focused on returns of goods bought online — but companies lose products at every stage of the supply chain.

An Amazon logistic center in Koblenz, Germany
Image: picture-alliance/dpa/T. Frey
Packages from Amazon
An increasing share of customers return goods they buy onlineImage: Imago Images/Stpp

A survey of UK donors from charity network In Kind Direct found that returned packages were among the least important reasons for taking goods off the market. The 2-3% of products that drop out of supply chains in Germany go mainly because of defective packaging, mislabeling, overproduction and the relaunch of products rendering old items unwanted, according to the BCG report. A 2019 study from the University of Bamberg gave returned packages slightly more importance, estimating that 3.9% are destroyed.

Online retailers dispute this. Zalando and Otto say less than 1% of goods returned to them are destroyed, while a spokesperson for Amazon Germany, which did not reveal the percentage of goods that it destroys, said "only if there is no other option we will send products for recycling, energy recovery, or to a landfill as a last resort." Amazon France said last year that it destroys just a small fraction of unsold goods.

Burning perfectly good clothes

The fashion industry, which is rapidly increasing its online offer, has come under particularly heavy fire for burning goods that could be reused. Campaigners say high-street brands destroy cheap clothes that are expensive to store, while high-end labels destroy expensive ones to avoid them being sold on black markets.

How can ultra-fast fashion be so fast?

Burberry, a British fashion company, destroyed €33.8 million of finished products including bags and perfume in 2018 before abandoning the practice after public backlash. Swedish fashion giant H&M was reported in 2017 to have burned clothes in a power plant in the town where its first store was founded, though it says these were unsuitable for reuse. A spokesperson for H&M Germany said that "for H&M, the destruction of products that are wearable and safe is not an option" but did not provide an estimate of what fraction of goods are destroyed.

"We need documentation," said Philipp Sommer, deputy head of circular economy at campaign group Environmental Action Germany (DUH), referring to the proposed update to the German waste law. "The ban is only as good as the public authority monitoring it."

Incentives to destroy?

Campaigners say there are three areas that need to be tackled: Consumers who buy more than they need; retailers who destroy usable goods; and a legal and tax system that in some countries disincentives reuse.

Some fixes may be fairly painless. In Germany, innatura, the social enterprise, receives products from partner manufacturers and retailers such as Amazon and distributes them to charities. But a value-added tax on donations means companies with unsold goods are incentivized to destroy them. "Currently it's way more expensive to donate than dispose," said Kronen, the founder, who supports an end to the tax.

While making donations easier comes with social benefits, campaigners caution it will do little to reduce the industry's carbon footprint. "Donating shouldn't replace throwing away," said Viola Wohlgemuth, an overconsumption campaigner at Greenpeace in Germany.

"If you can get rid of the stuff by donating to charitable places, that won't solve overproduction."

Ajit Niranjan Climate reporter@NiranjanAjit