Transforming fashion and textile waste into resources through SME innovation, community engagement and sustainability education

The fashion and textile sector is a major contributor to global environmental degradation, including waste generation, greenhouse gas emissions, water pollution, and marine microplastic contamination. Yet, it also offers strong opportunities to transform waste into valuable resources through circular economy strategies. This mini-review integrates insights from education-focused discussions, community-based initiatives, and small- and medium-sized enterprise (SME) practices to develop a unified perspective on reimagining waste as a resource in the fashion and textile sector. It highlights the roles of Education for Sustainable Development (ESD), 3Rs (reduce, reuse, and recycle) solutions, and SME-led innovation in advancing circularity, using a qualitative approach that combines synthesis with case-based analysis. The findings demonstrate that coordinated efforts across education, communities, and businesses can reduce waste, create high-value products, and contribute meaningfully to circularity. By focusing on “from waste to resources,” this review offers a novel perspective on circularity for sustainability, identifies research gaps, and informs potential integration in the textile and fashion business, circular economy research, and applications of ESD.

The fashion and textile sector is worth USD 1.7 trillion and employs over 300 million people worldwide (WIPO, 2025). However, the rapid expansion of the industry, particularly the fast-fashion model, has generated significant environmental and social pressure across production and consumption. The sector is responsible for 8% of global greenhouse emissions (UNEP, 2023), 20% of global wastewater (Ellen MacArthur Foundation, 2017), and 35% of ocean microplastics (Boucher and Friot, 2017). Every year, 92 million tons of textiles are wasted due to overproduction, overconsumption, and decreased lifespan of garments (UNEP, UN-Habitat, 2025). Over 80% of discarded textiles are either landfilled or incinerated, while less than 15%–20% are collected for reuse or recycling (Khairul Akter et al., 2025). The linear “take–make–dispose” model that dominates the sector therefore leads to significant economic losses, estimated at more than USD 100 billion annually in wasted material value (Shirvanimoghaddam et al., 2020).

In response, the concept of transforming waste to resource has gained attention within the sustainability and circular economy (CE) studies. CE approaches aim to circulate the value of materials within economic systems for as long as possible through strategies such as reuse, repair, remanufacturing, and recycling and among others (Geissdoerfer et al., 2017; Kirchherr et al., 2017; Khajuria et al., 2022). In the fashion and textile sector, this includes fiber-to-fiber recycling, garment repair and resale, upcycling, and the development of innovative materials derived from textile waste streams. However, technical solutions alone are insufficient, the systemic transformation also requires participation of the industry value chain, such as communities, businesses, consumers, and education systems.

Small and Medium-sized Enterprises (SMEs) are key actors in the CE transition due to their large representation in businesses within the fashion and textile value chain. They are embedded in local production and consumption systems, and are often sensitive in responding to consumers' demands, innovation, and resource flows. Failing to adopt CE among SMEs would lead to increased resource inefficiency, environmental degradation, and missed opportunities for additional value creation. Meanwhile, community-based actions following reducing, reusing, and recycling (3Rs) principles are increasingly acknowledged as essential components of CE transitions. They can divert fashion and textile waste from going to landfills, mobilize multi-stakeholder collaboration, and extend formal and informal CE networks, which supplement what government CE approaches may have overlooked.

Education also plays a critical role in supporting the transition from a linear to a circular fashion and textile system. Education for Sustainable Development (ESD) emphasizes the development of cognitive, social-emotional, and behavioral competencies that enable individuals and societies to make informed decisions for sustainability (UNESCO, 2020). In the fashion and textile sector, ESD can foster skills related to sustainable design, material efficiency, waste reduction, and responsible consumption while encouraging critical reflection on the environmental and social implications of fast fashion. Integrating CE principles within education systems can support behavioral change, innovation, and collaborative problem-solving in addressing sustainability challenges (Khajuria, 2025).

This mini review reframes fashion and textile waste as a valuable input for new materials, products, and services. This perspective is further built by merging three complementary strands of research and practice: (i) cognitive, social-emotional, and behavior learning dimensions of ESD, (ii) community-based 3R actions, and (iii) CE strategies and actions adopted by SMEs. Together, these elements outline a systemic pathway for creating high-value outcomes from fashion and textile waste.

The mini review was systematically conducted following the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) guidelines. A structured search strategy was developed on Scopus and Web of Science, using combinations of keywords, including: “ community,” “ SME,” and “ education.” These terms were combined using Boolean operators (AND/OR) to capture studies addressing circular practices within the fashion and textile system.

All articles were journal articles or reviews published between 2021 and 2026 in English within the domains of environmental science, social science, business, and education. The initial database search generated 2,464 records. These records were first screened based on titles and abstracts to remove irrelevant studies that did not focus on textile waste or the roles of SMEs, communities, or education. After applying inclusion and exclusion criteria, 18 articles were rigorously selected. In addition, 2 articles were included through a snowball search to provide more comprehensive perspectives for the analysis. Therefore, a total of 20 articles were screened and analyzed for the mini review. The entire PRISMA process is summarized in the self-elaborated Table 1. A full list of selected articles, including the issue addressed, transformation strategies, key stakeholders, and the main findings, is provided in the Supplementary material.

The review develops an analytical framework, as shown in Figure 1, that illustrates the process of transforming waste into resources through CE strategies and actions in the fashion and textile sector. Specifically, the framework highlights the role of ESD as a catalyst for the transformative learning of CE, communities as platforms for CE mobilization, and SMEs as practitioners for CE implementation. Furthermore, the framework emphasizes that circular transitions in the fashion and textile sector require an integrated approach that connects educational initiatives, community participation, and business innovation.

ESD as a catalyst for the transformative learning of CE

ESD is a lifelong learning process that enhances people's cognitive (knowledge and awareness), social-emotional (values and attitude), and behavioral (actions) dimensions of learning for sustainability (UNESCO, 2020). According to Jestratijevic et al. (2026), participants' awareness of social and environmental problems can serve as an entry point before joining textile waste circulation projects and taking action. Saravanan and Chandrasekar (2025) validated that CE knowledge encourages recycling, collaboration, restoration, and refurbishing, and positively impacts sustainable practices in the fashion and textile sector. As a next step, positive attitudes, values, and social norms act as invisible forces in shaping people's behavior in CE. Zhu et al. (2026) found in a survey in China that perceived social norms of recycling enhance people's intentions to act on it, especially when people are under peer pressure. However, awareness-attitude-behavior gaps in CE adoption remain considerable. In India, although the textile industry is more aware of environmental issues and holds positive attitudes, many businesses lag in CE implementation, necessitating further awareness-raising and education for such concepts (Saravanan and Chandrasekar, 2025).

ESD approaches should be solution-oriented, moving beyond awareness and attitude change and enabling learners to take actions for behavior change (UNESCO, 2020). For example, when promoting second-hand clothing consumption, action-oriented storytelling proved to be effective in leading consumers to buy, compared to communication tools that focus on piling up information without providing purposeful instructions (Smith et al., 2023). Such action-based education mechanisms can be applied to sustainable fashion branding narratives and CE policy recommendations as they evoke consumer agency and self-efficacy, as well as increase the likelihood of adopting pro-environmental behavior (Piller, 2023; Smith et al., 2023). Furthermore, in university-led CE initiatives on fashion and textiles (Behal et al., 2025; Handayani, 2025; Jestratijevic et al., 2026), curriculum-based education is supported by real-world and problem-based learning. Through these initiatives, participants can improve their knowledge and skills in redesign, reuse, and upcycling, thus turning fashion and textile waste into valuable resources through targeted actions (Behal et al., 2025; Jestratijevic et al., 2026).

ESD catalyzes CE transition in terms of providing an important foundation for individual understanding of sustainable production and consumption, and for guiding circular practices. However, ESD alone is insufficient for a collective behavioral change. It requires a holistic mechanism integrating ESD and an enabling environment to realize transformations. Piller (2023) establishes a framework recognizing that education can train designers to design out waste and teach consumers to distinguish greenwashing from genuine businesses. But fashion and textile businesses, especially SMEs, can hardly carry the burden of education to their entire value chain without social, institutional, and financial support. A sustainable system involves consumer engagement, multi-stakeholder cooperation, legislation and infrastructure, collective community network, financial and capital investment, and business model innovation, etc. (Piller, 2023). Within the system, ESD can facilitate consumer demands, business innovation, and institutional interventions by aligning their awareness and values, thus enabling long-lasting societal behavioral transformation in CE.

Community as a platform for CE mobilization

As part of the ESD framework, community-led actions function as living laboratories for sustainability. Main actors such as local public authorities, civil society organizations (CSOs), private companies, formal and non-formal education institutions, community residents, and their stakeholders are owners of their sustainable development decisions and actions (UNESCO, 2020). They learn through observation, practice, and collective reflection. Importantly, these initiatives help make the connection between everyday consumption choices and distant environmental impacts, such as the 3Rs. In doing so, these initiatives develop long-term behavior change and local ownership of sustainability transformation.

In Australia, over 2,000 tons of school uniforms are thrown away annually, and most of them are made of non-renewable materials such as polyester (Behal et al., 2025). A school-led program in Victoria (Behal et al., 2025) was established to reduce textile waste and promote reuse and resource efficiency. The program involves collaboration between schools, parents, suppliers, and students to co-design uniforms, replacing virgin polyester with recycled polyester to balance material durability and sustainability. Reverse logistics ensures a systematic circulation of used garments, including collection, redistribution, recycling, second-hand purchasing, and end-of-life processing. Furthermore, CE concepts are integrated into the school curriculum and everyday learning, encouraging both students and their families to foster awareness and actions toward textile waste reduction, reusing, and recycling.

In the UK, Počinková et al. (2023) identify that community-based clothing swap events can positively influence consumers' decisions in voluntary disposition and sustainable consumption. The more consumers attend swap activities, the more likely they are to prepare their “swap bag” for future swapping, so that a long-term reuse and recycle mindset and behaviors are curated. Consumers' swapping behavior will also create peer pressure on their surroundings, thus spreading to the whole community. In China, Wu et al. (2023) found in their field research that traditional tailoring within the communities no longer meets the increasing values and demands of consumers nowadays. The researchers developed a reuse and upcycling service application to connect community residents with local tailoring businesses and external stakeholders, such as schools and CSOs, to scale up the networks. Traditional tailoring and repair services can be expanded online and offline to include upcycling services, a knowledge exchange platform, as well as individual courses and activities.

SMEs as practitioners for CE implementation

SMEs are influential players within the local community and in advancing ESD. Globally, SMEs account for 90% of all businesses and over half of employment (Carvajal and Didier, 2024); their strategies and implementation are vital for the CE transition. In fashion and textiles, however, SMEs shaped by a linear model face a range of barriers to adopting CE principles. Internally, they lack financial resources (Ghisellini et al., 2025; Nguyen et al., 2026; Zanjirani Farahani et al., 2022), technological support and innovation (Huynh, 2022; Nguyen et al., 2026; Rumanti et al., 2021; Suchek et al., 2022), and leadership awareness but with a profit-only-driven mindset (Nguyen et al., 2026; Manolchev et al., 2024; Suchek et al., 2022). Externally, they are restrained by consumer perceptions and awareness-behavior gap (Howard et al., 2022; Nguyen et al., 2026; Piller, 2023; Počinková et al., 2023; Suchek et al., 2022; Wijekoon et al., 2025), the lack of infrastructure and policy support (Civera et al., 2025; Huynh, 2022; Nguyen et al., 2026; Rumanti et al., 2021; Suchek et al., 2022), and fragmented stakeholder relationships across the value chain (Nguyen et al., 2026; Piller, 2023).

In response, SMEs are actively seeking solutions and CE opportunities through education and knowledge sharing, technological and business model innovations, and stakeholder collaboration. These efforts help to leverage external resources, co-create or exchange value, and navigate the transition to CE. In the Textile District of Prato, Italy, Ghisellini et al. (2025) found that circular start-ups (CSUs) collaborate with large companies as a viable pathway for scaling. Textile waste generated from large firms, such as denim, cashmere, and wool, is reused, recycled, and transformed into new yarns and garments by CSUs using a regenerative circular business model. CSUs obtain resources, markets and knowledge while large firms reduce operational costs, improve their social image, and access circular outputs without sacrificing their existing business model. This win-win collaboration improves the economic performance of both sides and contributes to environmental protection, energy regeneration, and CE transition.

Innovation, whether through technology, a new method, or a new business model, provides opportunities for SMEs to improve resource recovery and waste diversion, reduce costs, enhance transparency and traceability, and execute cleaner production in achieving CE (Civera et al., 2025; Howard et al., 2022; Huynh, 2022; Manolchev et al., 2024; Rumanti et al., 2021; Suchek et al., 2022). Huynh (2022) identifies three functional business model innovations based on digital technologies to address the barriers SMEs face in adopting CE in Norway. First, a blockchain-based circular supply chain model improves efficiency in garment collection, sorting, and recycling through real-time data and boundless tracking. Second, service-based model, such as rental/subscription-based, repair, secondhand, or e-commerce models, prolong the product lifecycle, increases garment reuse, and offer consumers more service options while reducing their costs. Third, a pull demand-driven model mitigates overproduction and underuse by offering demand-based supply. The use of 3D printing, avatar-based 3D design and AI technologies enables seamless communication between designers and consumers, simplifies the production process, reduces material cost, and creates new revenue streams. In addition, consumers who benefit from avatar-based 3D designs are motivated to change their consumption behavior from fast fashion to sustainability-made, better quality and more personalized fitting.

Digital technology-empowered innovation can strengthen the competitiveness of SMEs in high-cost countries, such as Norway, compared to labor-intensive developing countries (Huynh, 2022). Norway is a developed economy with strong institutional and public support for sustainable development and digitalization. A smaller domestic fashion and textile industry in Norway allows SMEs to reduce labor costs and simplify production through digital innovations. Nevertheless, in developing countries such as Vietnam, Nguyen et al. (2026) underscore that the primary challenge hindering the utilization of textile waste resources is the lack of formal recycling and reverse logistics systems. There is an urgent need to improve infrastructure, regulation, and capacity-building. Bottom-up efforts made by Vietnamese SMEs, such as business model innovation, can only succeed within a supportive top-down national framework (Nguyen et al., 2026).

Integrating education, community-based actions, and SME-led innovation

The review shows that SMEs, communities, and ESD each contribute to CE transition, leveraging their unique characteristics and strengths. ESD provides a framework for sustainable development through education, building learners' knowledge and skills to turn fashion and textile waste into resources, and acting as a catalyst for individual and structural change. Communities rooted at the local level, can bring bottom-up perspectives that reflect local needs and social norms, complementing businesses and government-led CE interventions. SMEs serve as practitioners of CE implementation, although their efforts depend on top-down institutional frameworks and public support, they actively seek solutions through collaboration, innovation, and knowledge sharing.

The literature review identifies articles focusing on education, communities, and SMEs, respectively, with only a few articles examining overlaps. For example, when communities collaborate with educational institutions such as universities, communities become a real-world teaching and learning environment for both students and residents. These arrangements tend to be more flexible and engaging, can mobilize participants and can influence norms and behaviors through everyday practices (Behal et al., 2025; Handayani, 2025; Jestratijevic et al., 2026; Nagano, 2022). Nevertheless, articles demonstrating the relationships among education, community, and SMEs remain limited. There is a significant gap in research and empirical work integrating ESD, community-based actions, and business innovation in CE transition, particularly around transforming “waste to resource.”

Geographically, the review finds an imbalance in the distribution of existing research, with more studies being conducted in the developed economies, such as the UK, Australia, and Japan. Research on developing economies is concentrated in Asia, such as Indonesia, Vietnam and India, leaving Africa and South America underrepresented. While both developed and developing economies face CE implementation barriers, community and SMEs strategies differ with political and economic contexts (Nguyen et al., 2026; Saravanan and Chandrasekar, 2025). Therefore, comparative studies on CE strategies in these contexts could provide more empirical evidence and help address current research imbalances.

This review demonstrates that transforming waste into valuable resources needs a systemic and targeted transition toward CE. The current linear production and consumption model to generate significant environmental pressures, including excessive waste, pollution and resource depletion across terrestrial and marine ecosystems. To achieve effective CE transition and waste-resource transformation, a holistic mechanism is needed to harness technology and innovation, utilize data and CE tools, guarantee effective logistics and institutional support, leverage stakeholder collaboration and business model innovation, as well as improve public capacities and reduce the awareness-behavior gap. In this mechanism, communities mobilize local participation with a bottom-up perspective; SMEs offer innovative solutions, and ESD serves as a catalyst for transformative change through cognitive, social-emotional, and behavioral learning.

Future research can focus on the following areas: firstly, recognizing the barriers in CE implementation, especially in contexts with less academic attention, such as developing economies in Africa and Latin America; developing innovative solutions for real-world issues and engaging SMEs and communities. Secondly, integrate the cognitive, social-emotional and behavioral learning dimensions of ESD into studies on SMEs practices and community-based solutions. Thirdly, conduct case studies to examine the roles of education and learning, business-oriented strategies, and community-based 3Rs in advancing CE implementation, and evaluate long-term effectiveness. Finally, establish a mechanism to integrate ESD, community-based actions, and SMEs CE practices, illustrating their interconnective and collective impact on CE transition.