NGO “Podillia Fashion Cluster” — Circular Economy in the Light Industry of the Khmelnytskyi Community and Region.
How can 9,000 tonnes of textile waste be turned from a loss into capital?
The Podillia Fashion Cluster demonstrates that the waste problem is not an environmental issue—it is a matter of data scarcity and coordination. Through the creation of the powerful EDIH CLOTEX-HUB consortium, garment enterprises of the Khmelnytskyi region have joined forces with IT specialists and researchers to implement the “Twin Transition” (Digital & Green).
Discover how IoT sensors, digital mapping, and AI agents can transform a chaotic dumping ground into a transparent raw materials base—preparing regional businesses for the stringent EU Digital Product Passport standards.
“When we calculated that our pilot factories alone generate 9,000 tonnes of textiles per year, it became clear: this is not just waste – it is a lost resource. But no single factory, even the largest one, can build a recycling plant on its own. The cluster became the platform where competitors finally agreed: together, we are not just garment workshops – we are the foundation for a new circular industry.” – Liudmyla Bukhantsova, PFC Waste Recycling Expert
Practice Passport
| Practice Title | Circular Economy in the Light Industry of the Khmelnytskyi Community and Region |
| Cluster / Source Organization | NGO “Podillia Fashion Cluster” (Podillia Fashion Cluster) |
| Region | Khmelnytskyi Region |
| Implementation Period | Ongoing (active since the beginning of the cluster’s operations in 2022) |
| Cluster Maturity Level | Mature cluster with a project portfolio |
| Thematic Areas | Twin Transition (green and digital), innovation, governance |
| Target Audience | Mid-sized and mature industrial clusters across various sectors that generate significant volumes of industrial waste and aim to digitalize logistics |
Context and Problem Addressed by the Practice
This practice emerged from a large-scale problem that had been ignored for years. The light industry of the Khmelnytskyi region has historically generated significant volumes of waste. At the cluster’s pilot enterprises alone, more than 300 cubic meters of textile and footwear production residues accumulated each month. On an annual scale, this amounts to approximately 9,000 tonnes of textiles. When including footwear manufacturers, the volume increases severalfold.
The initial situation was that businesses perceived these residues исключительно as a “problem” and a financial burden due to disposal costs. Prior to the cluster’s intervention, waste management was fragmented and ad hoc. There was a deep institutional gap: the city’s environmental policy was developed separately from business realities, while the scientific potential of universities remained disconnected from the needs of production facilities.
Previous attempts to address the issue at a local level failed due to the lack of analytical tools (no one had accurate data on the volume or composition of waste), and the absence of a consolidated position among fragmented manufacturers made it impossible to attract systemic investments or grants. It became clear that without digital tracking and coordinated efforts, the transition to a circular economy would not be feasible.
Description of the Practice Mechanism (“What’s Under the Hood”)
The practice is built on the creation of a full-fledged ecosystem—the EDIH CLOTEX-HUB consortium—which brings together the interests of the light industry, the IT sector, sustainable development agencies, and academia to implement the Twin Transition (Green & Digital).
The process logic unfolds step by step. It begins with data generation: instead of searching for new landfill sites, the cluster initiated the development of a digital map showing the locations of specialized containers near production facilities. These containers are equipped with IoT fill-level sensors to optimize logistics.
Next comes the technological trajectory: researchers and students classify the collected textiles, while European consultants support the development of phased business models for advanced recycling.
The focus here is on a continuous interaction process in which each stakeholder has a clearly defined role. The Podillia Fashion Cluster acts as a постоянний moderator, removing barriers between competitors. Cluster members provide their production facilities as pilot sites.
Khmelnytskyi National University (KhNU) addresses the need for scientific expertise, the Khmelnytskyi IT Cluster develops software and sensors, while the Sustainable Development Agency “ASTAR” and the municipal office “Smart Environment Khmelnytskyi” design new policies, develop educational programs, and run awareness campaigns.
The project operates in a continuous rhythm, evolving through cycles of ideathons, hackathons, testing phases, and strategic sessions.
“This approach resembles a synergy of different worlds, where programmers, researchers, and entrepreneurs create digital product passports, preparing the region for EU standards,” – Oleh Demchuk, Chairman of the Board of the Sustainable Development Agency “ASTAR”.
Resources and Preconditions
The practice relies on a blended financial model. At the initial stage, it was funded through the participants’ own resources and contributions, which were later reinforced by grant support following the consortium’s recognition as a European Digital Innovation Hub (EDIH).
The human resources include a strong core cluster management team, engaged IT developers, researchers from Khmelnytskyi National University (KhNU), and sustainable development experts. The key organizational precondition was the high maturity level of the Podillia Fashion Cluster. Its management demonstrated the ability to orchestrate “coopetition” – a complex process of collaboration among direct market competitors to achieve a shared infrastructure goal.
Results and Outcomes
Short-term results: over 300 cubic meters of waste per month have been brought into the scope of systemic solutions. The development of digital maps and sensors has been initiated, the first ideathons and hackathons on textile classification have been conducted, and study tours to explore Norway’s experience have been organized. A pilot project has also been launched to develop and implement an AI agent in the production process to reduce waste and energy consumption.
Medium-term effects and structural changes have proven to be much deeper than mere technology adoption. The mindset (behavior) of SME owners has shifted: they have begun to perceive waste as a potential resource rather than a cost item. Moreover, decision-making within the municipal community is no longer carried out without analyzing environmental and economic impacts. Preparation for the implementation of Digital Product Passports (DPP) has become a regular strategic practice within the cluster, preparing businesses for future EU regulatory requirements.
Sustainability of the Practice
This practice demonstrates strong sustainability and does not depend on the completion of any specific grant. It continues to operate and evolve due to the inevitability of European regulations. Businesses clearly understand that if they do not adapt today, access to EU export markets will be closed tomorrow.
The EDIH status has firmly embedded this process into the cluster’s DNA. Ad hoc solutions, such as hiring temporary contractors for waste removal, are being phased out and replaced by sustainable recycling business models. Sustainability here is not merely driven by management efforts—it is rooted in clear economic viability recognized by manufacturers.
Limitations and Risks
The main risk is high capital intensity. The development of maps and sensors is only the first step. The real transition – from waste incineration to the creation of new materials (recycling and reuse) – requires multi-million investments in recycling plants, which წარმოადგენს a significant barrier for regional SMEs.
There is also a high communication risk (participant fatigue). Maintaining trust within the consortium over a long-term infrastructure project without quick financial returns is extremely challenging. This practice is not suitable for emerging clusters or initiatives that have not yet established a basic level of trust among their members and lack strong ecosystem partners (such as IT clusters or universities).
Lessons Learned and Recommendations for Clusters4Regions
This case serves as a benchmark example for the Clusters4Regions project. The key lesson is that the green transition in industry is physically impossible without digital transformation (IoT, digital product passports, and data ecosystems).
Less mature clusters or initiatives should not attempt to immediately build recycling facilities. Instead, they should adopt another key element from this practice: the model of creating a cross-sectoral consortium. Regional coordinators are encouraged to use this case in training programs as evidence that a cluster is not an event agency, but a systemic integrator capable of bringing together IT specialists, manufacturers, and researchers to solve challenges that no single enterprise can address alone.
The presentation of the case study is available via the link:
This practice has been included in the Ukraine Best Practice Guide, which we are developing as part of the Clusters4Regions project.
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Clusters4Regions is an initiative aimed at designing and implementing cluster programs in six regions of Ukraine (Vinnytsia, Volyn, Sumy, Odesa, Khmelnytskyi, and Ternopil regions). The initiative is implemented by the Ukrainian Cluster Alliance at the request of the Ministry of Economy, Environment and Agriculture of Ukraine, with the support of the Swiss-Ukrainian project “Ukraine`s Cohesion and Regional Development” UCORD, and is aligned with EU priorities, international donor frameworks, and Ukraine’s recovery agenda.