Can you drive your ESG goals with reverse logistics? – Natural Self Esteem

“I’m happy when someone tells me, ‘I have 17 trailer loads of excess product,'” says Claudia Freed.

Excess inventory might not be your everyday conversation starter, and it’s not every day that you find someone passionate about the topic. But then Freed is the CEO and President of EALgreen, which is not your everyday philanthropic organization.

The EAL stands for Education Assistance Limited. The organization was formed about 40 years ago to enable manufacturers and retailers to earn a tax credit by donating excess inventory to fund college scholarships. Freed, who joined EALgreen as general manager in 1995, was the recipient of the first scholarship in 1982. At the time, she was an immigrant student who had come to the States from Argentina as an 18-year-old with $36 in her pocket. “When I got the scholarship, I was a student at North Park University studying economics, and someone thought I had potential,” she recalls. Supporting students with potential remains the social impact part of the mission today.

I came across EALgreen in a press release after the organization received the Green Logistics Award from the Reverse Logistics Association. RLA noted that EALgreen was the first not-for-profit organization to be recognized for sustainability and that they have “shown great leadership in sustainable reverse logistics operations with an innovative alternative for returns, overage and obsolete inventory that results in less waste and environmental impact .”

Freed describes what the organization does as “product philanthropy.” The operational goal is the avoidance of waste in all its forms. Part of this is looking for ways to repurpose, reuse, or recycle the excess stock received, or alternatively, auction it off to third parties. And part of that is transporting and processing that inventory in the most sustainable way.

To this end, EALgreen operates two distribution centers: one in Rockford, Illinois and the other in Southern California. Together, the two facilities process between 500 and 700 trailer loads of donated products annually. On the logistics side, the organization hired a transport expert two years ago to set up an internal transport department. “The way we move product into our warehouses is the E in ES&G,” says Freed. “We are constantly reviewing shipping rates, transport routes and backhauling options. We minimize miles by using lots of intermodal transport and empty miles through backhauling whenever possible.”

Priority is given to products that can be used to run a college or university campus – this can be anything from laboratory equipment to lawn mowers to acoustic ceiling panels. In fact, EALgreen has a contract with Armstrong, which uses tiles that have outlived their useful life to produce recycled ceiling tiles. “We don’t get any money for this, but we promote the green,” says Freed.

The list of unacceptable items includes perishable items, although the organization can refer donors to food banks; hazardous materials; anything with an owner’s license plate, such as cars and boats; real estate; or items from outside the United States

Once the product is received in a DC, it will be inspected to see if it can be used by a college. A working lawnmower would fit that bill and be listed for sale on the site. If it fails this test, it may be eligible for a repair channel; repurposed to another non-profit organization; or sold and converted into cash. If it fails these tests, it can be recycled. That can also generate some money.

The S is the social impact of EALgreen’s activities. Corporate donors receive an increased tax donation on their inventory. Meanwhile, colleges and universities join EALgreen’s network for free and get access to the site. There they can buy products for a handling fee of about 10 cents on the dollar, which helps cover logistics costs. The difference between the value of goods and the handling fee will be converted into a discount on a reasonable tuition fee. “Instead of $100, they pay $10, and the $90 difference goes toward tuition reduction,” says Freed. Last year, those savings funded an average grant of about $2,300 for 1,100 students nationwide. Since the organization was founded, EALgreen has supported over 21,000 students.

The students are selected by the universities and not by the organization. “We want to strengthen the finance directors of our partner universities,” she says. Participating educational institutions are obliged to report their contributions to students back to the organization.

A key measure of effectiveness is how well a nonprofit uses the money it raises. EALgreen’s revenue comes from processing fees paid by its partner institutions; of products sold in other channels such as auctions and liquidators; and the product can be recycled for cash – another best practice the company, like Transport and Logistics, has developed. According to Freed, EALgreen keeps only 13% of the money from its operations and donates 87%. “At the end of the year, anything in excess of a 6-month operating reserve is returned to their college and university scholarship budgets in the form of a cash donation,” she says. That totaled $1,250,000 last year and $6 million over the past decade.

“Our goal is to reduce waste in the economy and empower people with college degrees,” says Freed. And maybe that explains why she’s happy about 17 trailer loads of someone else’s excess inventory.

About the author

Bob Trebilcock Bob Trebilcock, Editor-in-Chief, has covered materials handling, technology, logistics and supply chain issues for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock resides in Keene, NH. He can be reached at 603-357-0484.

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