What the recycling company did with the phones is completely irrelevant. The point is that Apple was advertising that these devices would be refurbished when they were sending them out to be destroyed.

When the lawsuits came to light, first reported in late 2020 by the Logic, a Canadian news outlet, industry observers were stunned. It wasn’t just the shocking scale of the purported heist; the incident implied that Apple was forcing a recycling partner to shred tens of thousands of iPhones that were apparently in prime condition for refurbishment. The timing was awkward: That same year, Apple had publicly committed to reaching 100% carbon neutrality across its product life cycle by 2030 and specified in an environmental report that “reuse is our first choice.” The shredding, critics said, contradicted Apple’s green marketing and was likely a way to keep cheaper used hardware from interfering with sales of new products.

https://9to5mac.com/2024/04/18/100000-iphones-stolen-instead-of-scrapped/

No one even knew about this until Apple sued said recycling company because they were not destroying them. They dropped the lawsuit because of all the bad press it was bringing them.