alt Hacker NewsThere just aren't that many people in developed countries who can make use of a pallet of unsellable clothing. Even free clothing distributors - which most organizations accepting clothing donations are not, by the way - generally strive to provide a broad selection of desirable clothing rather than a bunch of copies of an unpopular shirt.
What makes you think these are unsellable? Would you be happy if the law mandated a certain amount of time offering deep discounts and only then could allow shredding? Because I bet the vast majority of these clothes would sell just fine at 75% off, brand new.