Richard Sieg, Regulatory Counsel, Inmar

Sustainability has become a major centerpiece of the retail industry strategy. RILA itself published its first sustainability report in 2012 highlighting the major trends and best practices in the industry.  Meanwhile, shareholder activism has become a driver in publicly traded companies for the pursuit of sustainability programs.  As RILA points out, the business case for sustainability is only solidified further as more retailers build their sustainability strategies and report on their successes.  Private companies are also joining this initiative, especially in retail. And, while waste is only one piece of sustainability, it is an important one.  Liquidation and donation of viable consumer products is a great solution to help minimize waste and deliver products to the secondary market in a compliant manner.

On the pharmaceutical side of retail, over-the-counter drugs are often liquidated and/or donated, if they sit for too long on the retailers’ shelves. In its Comments to Management Standards for Hazardous Waste Pharmaceutical Proposed Rule, Walmart states that it “contracts with specialized third parties in its six Returns Centers to review OTC consumer products and determine their suitability for donation or liquidation.  Of the products reviewed…, approximately 80% are deemed acceptable for donation or liquidation.”  Thus, OTC products are very much a part of the sustainability efforts of retailers.

Of course, regulatory compliance considerations exist for liquidation and donation activities.  Retailers following industry best practices can maintain compliance relatively easily, since we are all in the business of managing viable products suitable for sale.  For example, wastes, broken and leaking products and products otherwise being managed as wastes cannot be returned to a reverse distributor for any purpose, much less liquidation or donation.

Expertise is needed to ensure the employees know when something is a waste and what to do with it.  For example, over-the-counter drugs are considered wastes by the federal government unless an expert evaluation of the drugs show the drugs remain safe and effective.  In practical terms, for retailers, this means that expired OTC drugs are wastes when they are expired.  Some state jurisdictions have passed laws stating that expired drugs cannot be sold and some are enforcing this (e.g., New York among others).   Retailers must, therefore, know what items are date sensitive and ensure they are either removing them from the shelves with enough lead time to liquidate or donate the items.

The Environmental Protection Agency published “Checklist to Assist in Evaluating Whether Commercial Chemical Products [(CCPs)] Are Solid and Hazardous Waste Under the Resource Conservation and Recovery Act,” which guides inspectors as they evaluate whether CCPs (e.g., consumer products) are being managed in a waste-like manner.  Managing these products properly will avoid the development of practices that may be interpreted as selling wastes to the secondary market or donating wastes to charitable organizations.

The proper management of safety recalls is also very important for the shipping of consumer products for liquidation and donation.  As we all know, items placed on safety recall (including stop sales) must be efficiently and effectively diverted from the stream of commerce.  It is important to have procedures in place to manage safety recalls effectively.  Inevitably, mistakes happen and a consumer product on safety recall may inadvertently be sent to the reverse distributor.  Inmar uses its proprietary computer system (“safety recall database”) to notify scanners when such items are found in consumer returns.  When Inmar is notified of a safety recall, the UPC is entered into our system.  Once in the system, a scanned item with that UPC is diverted from the client’s returns and out of commerce.  This provides an extra layer of protection for our clients who inadvertently ship such items to our facilities.

The result of following the best practices for liquidation and donation of consumer product is that the generation of waste is minimized.  When performed in a compliant manner, liquidation and donation are terrific end of life solutions that prevent consumer products from becoming wastes.  This is a great result for the retailer, the purchaser in the secondary market or donee, and society generally.

 

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