A viscose shirt and a roll of toilet paper are two very different products, but they have one thing in common. They’re both made from wood fibre – a commodity that is in growing demand, placing undue pressure on forests, environmentalists warn.

According to Canopy, a non-profit that works with over 950 companies to transform supply chains, more than 300 million trees are felled every year, including from some of the world’s most biodiversity-rich forests, to make wood-based fibres for the fashion industry. Its calculations are based on 2023 global industrial wood-pulp production data.

“Reducing dependency on forests and forest-based fibres just makes business sense from a resiliency perspective,” says Canopy founder Nicole Rycroft.

As the devastating wildfires in Europe and North America, triggered by this summer’s heatwaves, have demonstrated, “this is a fibre basket that is literally going up in smoke”.

She expects the EU’s deforestation regulation (EUDR) to increase competition for the wood that can enter the EU market, driving up cost. In addition, viscose production is chemically intensive, so closure of the Strait of Hormuz has also pushed up prices, observes Rycroft.

While one alternative, lyocell, uses a closed-loop solvent system that is more environmentally benign than the toxic chemicals used in viscose production, it is still made with wood pulp, so its sustainability depends on where the wood is sourced.

That’s why Canopy believes the answer lies in scaling up the use of next-generation fibres such as agricultural residues. Earlier this year, it announced the results of successful pilot to explore the commercial viability of fibres derived from wheat straw. Every year hundreds of millions of tons of wheat and rice straw are burned by farmers as they prepare their fields for the next crop, adding to carbon emissions and polluting the atmosphere with smoke and particulates.

“We wanted to showcase that it was possible to produce a high quality, commercially viable product that would meet the technical and the performance specifications that brands like H&M (and) C&A would require, and that the entire value chain could actually work with it,” Rycroft says.

The journey began in India, with wheat straw collected from two states and processed into pulp by Finnish bio-refiner Chempolis. It was then sent to the Thuringian Institute of Textile and Plastics Research in Germany, where it was dissolved and spun before being converted into yarn by Portugal-based Inovafil. Still other partners wove the yarn into different fabric types before being made into test garments by the brands.

Some elements of the production process need to be optimised through scale-up, but Canopy concludes that, over time, wheat straw could achieve cost-parity with wood based lyocell, as there are some advantages in process efficiency.

A spokesperson for C&A told The Ethical Corporation that it didn’t encounter any major quality issues during the pilot. “We see potential for agricultural waste such as wheat straw to become an alternative feedstock for man-made cellulosic fibres. At this stage, the main barrier is scale, as available volumes remain limited.”In 2024, man-made cellulosic fibres accounted for 8% of the company’s material mix.

Canopy has also worked with Australia-based Nanollose, which has developed a microbial technology to convert waste from coconut water production into cellulose. It’s demonstrated that the fibre can be spun into yarn to make garments, and is now scoping sites and equipment for a pilot facility.

Demand from brands is needed to attract the finance to move from pilot to commercial production of next-gen fibres, says Rycroft.

Canopy is working with brand partners and viscose producers to aggregate market demand, which will give producers and innovators confidence that there will be buyers. “No single brand, no single producer or investor can drive this transition themselves,” says Rycroft.

China and India already produce several millions of tons of pulp made from agricultural residues, including wheat and rice straw as well as bagasse (sugar cane residue) for paper and packaging. Indeed, Canopy lists more than 180 companies producing paper and packing with wheat straw and bagasse on its database.

In Europe, champagne producer Veuve Clicquot has been using recycled paper and locally sourced hemp for its gift boxes since 2022. Incorporating hemp has made the boxes 12% lighter, cutting transportation costs.

By 2033, Canopy wants to see a 30% reduction in the wood fibre used to produce both textiles and packaging. It estimates that producing the next-gen fibres to replace that wood would require around $78 billion in new infrastructure.

Rycroft points out that materials are 30% of the climate solution, and they currently get less than 3% of impact investment. “There’s a bit of a blind spot around both return on investment and commercial returns that are possible within next-gen materials.”Some toilet paper makers are also investing in a new generation of non-wood fibres. This summer, one of the world’s largest, Kimberly-Clark, announced a breakthrough in its search.

Out of over 70 potential fibre candidates, it’s now focusing on hesperaloe, a plant with a high cellulose content that can grow in arid conditions. The resulting tissue, it says, can meet the criteria for softness and durability that have previously only been achieved using blends of soft and hardwood fibres.

Such is its optimism that Kimberly-Clark has begun building a pilot facility in Arizona expected to open next year, and is working with farmers and technical experts to assess the feasibility of growing hesperaloe year-round as a commercial crop.

Describing it as “an exciting moonshot”, Craig Slavtcheff, chief research and development officer at Kimberly-Clark said in a statement that “we believe this material will provide curve-bending performance in our products while strengthening our long-term growth and supply chain resilience”.

The company declined to say how much land might be needed to grow hesperaloe as a crop, but says that if production can be scaled it could be cheaper and less environmentally damaging than chopping down forest. While it has spent $250 million getting to this point, commercialisation will cost multiple times that figure.

This year, Kimberly-Clark said it had met its interim 2025 goal of cutting its use of fibres from primary northern and boreal forests by 50%, substituting them with wood fibres from FSC-certified forests, and recycled fibre.

The Natural Resources Defence Council (NRDC), which has long pushed tissue makers to cut their reliance on boreal forests, said Kimberly-Clark’s search for sustainable alternatives came because “consumers started asking where their toilet paper comes from, and because shareholders started asking how long a business built on clearcut forests can last”.

Global Canopy, a non-profit that works on improving transparency and accountability in supply chains, says it is laudable that companies exposed to forest risk commodities are looking at alternative source materials and circularity.

But pilot projects are small and will take time scale; meanwhile the pressure on forests is growing. The NGO told the The Ethical Corporation that companies’ “main focus should be on tackling deforestation within their supply chains by conducting risk assessments, reporting on deforestation-free certified volumes and engaging high risk suppliers.”

This article is from the latest issue of The Ethical Corporation magazine, on deforestation risk. You can download the digital pdf of the magazine by clicking here