Canopy, which collaborates with over 1,000 brands to facilitate supply chain shifts that protect forests and promote low-carbon practices, has presented new research on vulnerabilities in global wood supply chains. The nonprofit also announced a $2bn blended finance platform aimed at expanding sustainable textile production.
The new research brief, created in partnership with Finance Earth, outlines pressures affecting global wood supply chains due to climate impacts, regulatory changes, and increased competition for forest resources.
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The report identifies key risks for businesses that rely on forest products, including rising demand for wood fibre in multiple sectors that now surpass what forests can sustainably provide.
Further challenges highlighted include limited wood availability resulting from land competition and ecosystem degradation, alongside stricter compliance requirements related to regulations such as the EU Deforestation Regulation and human rights due diligence obligations.
The research recommends three approaches for companies:
- Lessen dependence on raw wood by expanding the use of circular and next-generation materials created from sources such as agricultural by-products, discarded textiles, and recycled materials, to separate growth from the use of primary forests and reduce vulnerability to fluctuations in price and regulatory requirements.
- Strengthen the security of the remaining wood supply by making sure any ongoing use of new wood is properly certified, fully traceable, and evaluated for environmental and community impacts, including risks to ancient forests, endangered ecosystems, Indigenous Peoples, and local populations.
- Prepare for potential disruptions by including wood-related risks in scenario planning and stress testing processes, as well as directing investment towards more robust sourcing methods and strategies.
Canopy founder and executive director Nicole Rycroft said: “Forests are one of our greatest climate allies and central to meeting global climate and nature targets, yet current sourcing models and supply chains are pushing them to breaking point. This brief makes it clear: if companies and investors stay locked into business-as-usual wood sourcing, they are signing up for higher costs, greater supply vulnerability, and growing regulatory and reputational risk. This exposes businesses unnecessarily, given there is a clear exit ramp with Next Gen and alternative sources.”
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By GlobalDataThrough the newly launched finance platform, Canopy will involve government representatives, private sector participants, investors, and philanthropic organisations to support wider adoption of sustainable textile materials.
Canopy’s replicable blended finance model aims to fund the full value chain, from feedstock systems and pre-processing to mill upgrades and bankable offtake agreements. The programme will initially launch in India, where abundant residues and recycled textiles, strong fibre-processing capacity, and rising global demand support rapid scaling. By aligning catalytic capital, private investors, and supply-chain partners under one coordinated approach, it seeks to scale Next Gen production across paper, packaging, and MMCF textiles, creating a template for other markets.
