Digital Technologies Driving Circular Economy Adoption in the Textile Industry: A Systematic Literature Review

Abstract

The textile industry has undergone a dramatic change in recent times because organizations are incorporating digital technology solutions for addressing issues related to sustainability and fast-tracking the journey toward a circular economy. These include Digital Product Passports (DPP), blockchain, Radio Frequency Identification (RFID), the Internet of Things (IoT), Artificial Intelligence (AI), and Industry 4.0 technologies, among others. The current research intends to conduct a systematic review of the literature on the topic of digital transformation and sustainability in the textile industry. A Systematic Literature Review (SLR) was conducted following the preferred reporting items for systematic reviews and meta-analyses (PRISMA) guidelines. In all, 55 peer-reviewed journals from 2020 to 2026 have been reviewed based on a structured selection process and analyzed using the thematic analysis approach. Six themes have been identified in the literature, which are as follows: Digital Product Passport, Digital Traceability Technologies, Industry 4.0 & Artificial Intelligence, Circular Economy Practices and Circular Supply Chains, Sustainability and Environmental, Social & Governance (ESG), and Barriers, Challenges and Future Research Directions. The results show that digital technology greatly improves the traceability of products, efficiency, and resource recycling, facilitating sustainability along the supply chain. Yet, issues such as costly digital technology implementation, inadequate digital infrastructure, the absence of standardization in digital data structures, and organizational readiness hinder digital technologies' broader application. This research fills a gap in the literature in that it identifies a consolidated thematic framework explaining the role of digital technologies in transforming the industry sustainably. The results provide insights useful for academic studies, industry professionals, and policymakers working on sustainable textile ecosystems powered by digital technology.