Return flag(s) to participating retail stores who will dispose of them.

Flags made of natural fibers (wool, cotton, linen) should be burned in a dignified manner; privately without ceremony or public attention being drawn to the destruction of the material.

Flags made of synthetic material (nylon or polyester) should be respectfully torn into strips, with each element of the flag reduced to a single colour, so that the remaining pieces do not resemble a flag. The individual pieces should then be placed in a bag for disposal – the shreds of fabric should not be re-used or fashioned into anything.

Based on my quick google. I'm guessing they're handling burning them / shredding them.