The most common and most likely answer to this crossword clue is the 5 letter word FLOCK
I've seen this crossword clue in Financial Times
F
L
O
C
K
More clues leading to the result FLOCK
Buddy explains!

The straight part
We know that "waste wool" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case waste wool = flock.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does FLOCK mean?
FLOCK noun- A large number of birds, especially those gathered together for the purpose of migration.
- A large number of animals, especially sheep or goats kept together.
- Those served by a particular pastor or shepherd.
- A large number of people.
- A religious congregation.
- To congregate in or head towards a place in large numbers.
- To flock to; to crowd.
- To treat a pool with chemicals to remove suspended particles.
- Coarse tufts of wool or cotton used in bedding.
- A lock of wool or hair.
- Very fine sifted woollen refuse, especially that from shearing the nap of cloths, formerly used as a coating for wallpaper to give it a velvety or clothlike appearance; also, the dust of vegetable fibre used for a similar purpose.
- To coat a surface with dense fibers or particles.