A lot of companies require branded work wear to be returned or destroyed to stop people impersonating their employees. It may not seem like a big deal but a bad actor could use it in any number of ways.
Imagine some one used a branded work shirt to gain access to your granny’s house when she thought they were from a company or service they trusted etc.
Certainly the police and other emergency services won’t want their uniforms in the wrong hands.
In my view it might seem like wastage but there are good reasons to destroy these clothing items, I guess it depends what business you’re in.