Growing concerns for wood supply chains
'Sustainable' wood supply will not be sufficient to absorb future demand growth, finds report.
Competition is said to be increasing for a finite amount of wood, as sectors such as energy and construction increase consumption.
The environmental not-for-profit Canopy and social enterprise Finance Earth call for urgent strategic shifts from businesses to strengthen resilience, reduce exposure, and align with emerging climate and nature regulations.
The brief cites escalating demand, climate-driven shocks and tightening regulations as converging to create a riskier and more volatile outlook for companies dependent on conventional wood-based inputs in paper, packaging and textiles.
Canopy and Finance Earth find that these pressures, alongside the new regulations on deforestation and degradation, are expected to drive sustained cost increases, supply volatility and higher compliance spending for companies that heavily rely on virgin wood.
Paper Thin Comfort - Wood Fibre Risk in a Finite Forest World warns that credibly certified wood are already limited and heavily competed for, meaning that most 'sustainable' wood supply is effectively spoken for and will not be sufficient to absorb future demand growth.
The brief sets out a three-part strategy for companies to reduce exposure and build resilience:
- Reduce reliance on virgin wood by scaling circular and Next Gen alternatives made from agricultural residues, waste textiles and recycled inputs, to delink growth from primary and other high-value forests and lower exposure to price and compliance shocks.
- De-risk remaining wood supply by ensuring any continued use of virgin wood is credibly certified, fully traceable and screened for ecological and social risks, including impacts on ancient and endangered forests or Indigenous Peoples and local communities.
- Plan for future shocks by integrating wood-related risks into scenario analysis and stress testing, and steering capital towards more resilient sourcing and investment strategies
