Shoppers at H&M in Stockholm will be able to watch their old jumpers being knitted into a new sweater or scarf on the spot as the world's second-biggest fashion retailer looks for new ways to encourage its customers to recycle used garments.

The textile industry is one of the most polluting, something fashion giants are under increasing pressure to address as shoppers become more aware of the environmental impact of clothes production and as regulations tighten...

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