Anti-waste policy: the supply chain response

In the aim of achieving a circular economy, lawmakers are passing waste avoidance regulations, including for non-food segments. Many brands have already begun to act on their own initiative, aided by specialist circularity organisations and supply chain partners.

Reducing waste is one of the objectives of the EU circular economy action plan, itself one of the building blocks of the European Green Deal. The anti-wastage measures include the ban on single-use plastics and steps to optimise packaging materials and their recyclability.

Another focus is to reuse, repurpose or recycle unsold goods. This is one of the leading aspects of the French AGEC law^[1] which came into force on January 1, 2022. Through the law, a large proportion of an estimated 1.4 billion euros of unsold non-food goods could be saved from destruction.

Donation in kind

The AGEC law identifies donation to charity as the priority channel for unsold goods. By meeting their own CSR objectives, companies making in-kind donations can benefit from corporation tax relief. For some brands, donation is also more acceptable than clearance selling, which they see as detrimental to their image.

In the luxury goods and cosmetics sector, sustainability lies at the heart of brand strategies. Leading household names are faced with newcomers and start-ups whose propositions revolve around green credentials. Additionally, ESG (Environmental, Social, Governance) criteria are becoming more important in investors’ choices. Consequently, company stock market valuations increasingly depend on companies’ actions and commitments. “These policies are no longer just ‘nice to have’, says Alexandre de Beaupuy, Development Director at FM Logistics for Health, Beauty and Luxury goods. “Firms must have a defined sustainability policy and show that they are keeping their promises.”

It was thus that one French cosmetics brand, had already begun donating unsold goods to non-profit organisations – with the help of FM Logistic – even before AGEC came into force. Donated goods bear the same risks as those intended for retail, meaning that the same guarantees must apply. This includes their documentation, transport and traceability. In the event of a product recall, it must be possible to contact the recipient charity just like a retailer.

Turnkey anti-wastage solutions

In many cases, these donations are orchestrated with the help of a third party specialising in the circular economy such as Phenix. “These organisations coordinate the availability of unsold products and their potential recipients, like a matchmaking service,” says Pénélope Laigo, Sustainable Development (CSR) & QHSE Director at FM Logistic. “They will recommend the appropriate outlet for the goods, which in certain cases could be waste-to-heat or recycling. And they run audits to ensure that the products fit the description and are fully traceable.”

In this set-up, FM Logistic partners the brand and Phenix to form a turnkey solution for the disposal of these unsold non-food goods. Near Orleans, the group has been organising the donation of unsold private-label goods of one of France’s leading cosmetics and perfume retail chains for three years. “With our client, we drew up a full inventory of the products close to their expiry date, which could then be donated to charities and retirement homes. It was an excellent case of co-construction between ourselves as logistics providers, the retail brand and the third-party facilitator,” says Bertrand Reynard de Lagny, FM Logistic Platform Director for the Escrennes depot.

A proactive role for logistics

Logistics providers already play an active role in advising their clients on inventory issues. With alerts on approaching the expiry dates, they can recommend strategies to avoid wastage, including selling directly online instead of in store.

“Our role is to proactively recommend the appropriate anti-wastage solutions to our clients to help them stand apart from their competitors,” adds Pénélope Laigo. “There are multiple initiatives that can be put in place to be cleaner, reduce the use of plastic, be greener, and more sustainable than before. Avoiding waste through donation is in alignment with our stance as a contributor to more sustainable supply chains.”

In the coming years, more companies will be seeking to comply with regulations in more countries. The issues of circular economy and anti-wastage can therefore only grow further as Europe embraces a green future.

^[1] AGEC standing for “anti-wastage for a circular economy”, “Loi anti-gaspillage pour une économie circulaire” in French.