Market map: Sustainable forestry & biomaterials — the categories that will matter next

Forests sequester approximately 2.6 billion tonnes of CO₂ annually—roughly 30% of anthropogenic emissions—yet fewer than 12% of the world's production forests carry third-party sustainability certification. Meanwhile, cross-laminated timber (CLT) construction has grown at a compound annual rate exceeding 14% since 2020, signaling that biomaterials are finally moving from niche specification to mainstream procurement. This market map examines the signals to watch, value pools emerging, and how the sustainable forestry and biomaterials landscape may shift over the next 12–24 months, with particular focus on the KPIs that matter, benchmark ranges, and what "good" looks like in practice.

Why It Matters

The sustainable forestry and biomaterials sector sits at the intersection of three megatrends reshaping capital allocation: decarbonization mandates, circular economy regulation, and supply chain resilience imperatives. In 2024, the global sustainable forestry market reached an estimated $42.8 billion, with projections suggesting growth to $58.3 billion by 2028. Several drivers underpin this trajectory.

First, the mass timber construction segment has accelerated dramatically. North American CLT production capacity expanded by 47% between 2022 and 2025, with manufacturing facilities now operational in Oregon, Arkansas, Alabama, and British Columbia. The International Code Council's approval of 18-story mass timber buildings in the 2021 International Building Code—subsequently adopted by most U.S. jurisdictions—removed a critical regulatory barrier. Projects like Hines' T3 developments in Minneapolis, Atlanta, and Austin demonstrated that institutional capital would underwrite timber-framed commercial real estate at scale.

Second, forest certification systems have matured. The Forest Stewardship Council (FSC) certified area surpassed 160 million hectares globally by late 2024, while the Programme for the Endorsement of Forest Certification (PEFC) reached 320 million hectares across 55 national systems. Combined, certified forests now represent approximately 11.4% of the world's total forest area—up from 8.7% a decade ago. Corporate procurement policies increasingly mandate chain-of-custody verification, with the EU Deforestation Regulation (EUDR) requiring due diligence documentation for timber, palm oil, soy, and cattle products entering European markets beginning December 2024.

Third, forest carbon markets have expanded despite volatility. Forestry and land-use credits represented 42% of voluntary carbon market transaction volume in 2023, according to Ecosystem Marketplace data. While quality concerns prompted rating agencies like Sylvera, BeZero, and Calyx Global to downgrade numerous REDD+ projects, improved monitoring via satellite-based MRV (measurement, reporting, and verification) systems has begun restoring buyer confidence. Corporate net-zero commitments increasingly distinguish between avoided deforestation credits and removal-based afforestation/reforestation credits, with the latter commanding price premiums of 40–60%.

Key Concepts

Understanding the sustainable forestry and biomaterials landscape requires familiarity with several foundational concepts that shape investment theses, procurement decisions, and regulatory compliance strategies.

Mass Timber and Cross-Laminated Timber (CLT): Mass timber refers to engineered wood products manufactured by bonding lumber layers under pressure. CLT panels—typically five to seven layers of dimensional lumber arranged in perpendicular orientations and adhesive-bonded—offer structural performance comparable to concrete and steel while storing approximately 1 tonne of CO₂ per cubic meter. Glue-laminated timber (glulam) beams, nail-laminated timber (NLT), and dowel-laminated timber (DLT) represent related product categories. The embodied carbon advantage proves particularly significant: lifecycle assessments consistently show 25–45% lower cradle-to-gate emissions compared to functionally equivalent steel-and-concrete assemblies.

Sustainable Forest Management (SFM): SFM encompasses silvicultural practices that maintain forest productivity, biodiversity, and ecosystem services across harvest cycles. Key principles include maintaining continuous canopy cover, preserving old-growth reserves, protecting riparian buffer zones, managing harvest rotations aligned with growth rates, and respecting Indigenous land rights. Third-party certification provides assurance that operators adhere to defined SFM standards.

FSC and PEFC Certification Systems: The Forest Stewardship Council operates a single global standard with regional adaptation, emphasizing stakeholder governance that balances environmental, social, and economic chambers. PEFC functions as an umbrella organization endorsing national certification schemes—including the Sustainable Forestry Initiative (SFI) in North America, the Canadian Standards Association (CSA), and the American Tree Farm System (ATFS). While FSC maintains stricter prohibitions on converting natural forests to plantations and stronger Indigenous consent requirements, PEFC-endorsed schemes often achieve broader coverage due to lower audit costs and simpler documentation requirements.

Forest Carbon Credits: Carbon credits from forestry projects fall into two primary categories. Avoided deforestation credits (commonly REDD+ under the Verra VCS standard) compensate landowners for preserving forests that would otherwise face conversion pressure. Afforestation/reforestation (ARR) credits reward tree planting on previously non-forested land. Improved forest management (IFM) credits recognize enhanced carbon sequestration through extended rotations or reduced-impact logging. Each category presents distinct additionality, permanence, and leakage risk profiles that sophisticated buyers must evaluate.

Biocomposites and Bio-Based Materials: Beyond structural timber, the biomaterials category encompasses a growing portfolio of forest-derived products. Lignin—a byproduct of pulp manufacturing—serves as feedstock for carbon fibers, adhesives, and thermoplastics. Nanocellulose offers reinforcement properties for packaging, coatings, and biomedical applications. Bio-based polymers derived from wood sugars compete with petroleum-derived plastics in select markets. These "cascading use" applications maximize value extraction from each harvested tree.

Sustainable Forestry KPI Benchmarks

KPI	Laggard	Typical	Leader	Notes
Certified forest area (% of managed timberland)	<25%	40–60%	>85%	Chain-of-custody documentation increasingly required for institutional buyers
Carbon sequestration rate (tCO₂/ha/yr)	<3.0	4.5–7.0	>10.0	Varies significantly by species, climate zone, and management intensity
Harvest rotation period vs. MAI-optimal	<70%	85–100%	>110%	Extending rotations beyond maximum annual increment improves carbon storage
Biodiversity index (species richness %)	<60% baseline	75–90%	>95%	Measured against natural forest reference ecosystems
Supply chain traceability (% volume verified)	<50%	70–85%	100%	EUDR compliance requires full traceability to plot-level coordinates
Mass timber embodied carbon (kgCO₂e/m³)	>150	80–120	<50	Net-negative achievable with sustainable sourcing and renewable manufacturing energy

What's Working and What Isn't

What's Working

The CLT Construction Boom: Institutional real estate investors have embraced mass timber as both a decarbonization strategy and a tenant amenity. Projects like Brookfield's 25-story Ascent tower in Milwaukee (the tallest mass timber building in North America upon completion), Google's hybrid-timber structures at the Bay View campus, and Microsoft's silicon forest campus expansions demonstrate that Fortune 500 companies will specify timber framing at scale. The economics work: CLT buildings typically achieve 25% faster construction timelines than concrete equivalents, offsetting higher material costs through reduced labor and financing expenses.

Corporate Forest Commitments: Major consumer goods companies have aligned supply chain policies with zero-deforestation pledges. Nestlé achieved 97.3% deforestation-free sourcing for its priority commodities by 2024. Unilever committed to forest-positive strategies encompassing not only its direct footprint but also regenerative sourcing programs. Apple's 2030 carbon neutrality roadmap includes a Restore Fund partnership with Conservation International and Goldman Sachs, financing sustainable forestry projects that will sequester 1 million tonnes of CO₂ annually.

FSC Growth and Premium Pricing: FSC-certified products command documented price premiums across multiple categories. Certified hardwood lumber achieves 8–15% higher mill-gate pricing than uncertified equivalents. FSC-certified paper products generate measurable willingness-to-pay from environmentally conscious consumers. Perhaps more importantly, certification increasingly serves as a market access requirement rather than merely a differentiation opportunity—major retailers including IKEA, Home Depot, and Lowe's have implemented preferred vendor programs favoring certified suppliers.

What's Not Working

Deforestation Leakage: Conservation interventions frequently displace land-use pressure rather than eliminating it. A 2024 meta-analysis in Nature Sustainability found that REDD+ projects reduced deforestation within project boundaries by 47% but increased forest loss in adjacent buffer zones by 12–18%. This "leakage" undermines additionality claims and has prompted verification standards to tighten jurisdictional nesting requirements—though implementation remains inconsistent.

Certification Cost Burdens: Smallholder forest owners—who manage an estimated 22% of the world's forests—face disproportionate certification barriers. FSC group certification has helped, but audit costs of $3,000–8,000 annually remain prohibitive for operators managing fewer than 500 hectares. The resulting certification gap concentrates sustainable supply among industrial forestry operators while excluding the community-based forest enterprises most critical to tropical forest conservation.

Carbon Accounting Gaps: Scope 3 emissions accounting for timber products remains methodologically contested. Should harvested wood products receive credit for biogenic carbon storage? How should companies account for end-of-life emissions when buildings are eventually demolished? The Science Based Targets initiative's Forest, Land and Agriculture (FLAG) guidance provides direction, but inconsistent corporate interpretation creates comparability challenges. Buyers cannot easily distinguish genuinely low-carbon supply chains from creatively accounting ones.

Key Players

Established Leaders

Weyerhaeuser operates 11 million acres of U.S. timberland with 100% third-party certification under SFI and FSC standards. The company has invested heavily in carbon credit monetization, generating over $50 million annually from forest carbon programs while maintaining timber production volumes.

Stora Enso, the Finnish-Swedish forest products giant, has positioned itself as Europe's leading mass timber manufacturer. Its CLT and LVL (laminated veneer lumber) facilities in Austria and Finland supply high-profile projects across the EU, while its research division advances lignin-based alternatives to fossil-derived materials.

Södra, the Swedish forest-owner cooperative, demonstrates that member-owned models can achieve scale. With 52,000 member forest owners managing 2.6 million hectares, Södra combines fragmented smallholder supply into certified fiber streams for pulp, sawn timber, and bioenergy markets.

Mercer International operates pulp mills and wood products facilities across North America and Germany, with particular strength in nanocellulose research. The company's collaboration with academic partners on next-generation biocomposites positions it for biomaterials markets beyond traditional forest products.

Emerging Startups

Timber Technologies has developed a modular CLT manufacturing system that reduces facility capital costs by 60%, enabling regional production closer to construction markets and reducing transportation emissions.

Pachama applies machine learning to satellite imagery for forest carbon MRV, offering verification services that accelerate credit issuance timelines from 18 months to under 90 days while reducing audit costs.

Made of Air produces biochar-based thermoplastics from waste wood, creating carbon-negative materials for automotive, consumer electronics, and building applications.

Key Investors & Funders

The Bezos Earth Fund has allocated $3 billion to forest and nature solutions, including landscape-scale reforestation and forest-to-fiber supply chain development. Breakthrough Energy Ventures invested in timber technology plays including CarbonCure and Living Carbon. The World Bank's Forest Carbon Partnership Facility has mobilized over $1.3 billion for REDD+ readiness and implementation in developing countries. Manulife Investment Management operates one of the world's largest sustainable timberland portfolios, with $7.2 billion in forest assets under management.

Examples

Mjøstårnet Tower, Norway: Completed in 2019, this 18-story mixed-use tower in Brumunddal demonstrates that mass timber can achieve high-rise applications in rigorous Nordic climates. Using 2,600 cubic meters of glulam and CLT—predominantly FSC-certified Norwegian spruce—the structure stores approximately 1,500 tonnes of CO₂ while eliminating an estimated 2,000 tonnes of emissions compared to a conventional concrete-and-steel alternative. The project catalyzed building code reforms across Scandinavia and proved that fire engineering solutions could satisfy insurance underwriters.
Conservation International's Alto Mayo Initiative, Peru: Operating across 182,000 hectares of threatened Amazonian cloud forest, this avoided deforestation program combines Verra VCS carbon credit generation with community livelihood interventions. By training farmers in shade-grown coffee production and sustainable forest management, the project has reduced deforestation rates by 75% while generating over $8 million in carbon credit revenues that fund ongoing monitoring and enforcement. Third-party verification confirms permanence rates exceeding 95%.
Katerra Legacy: Lessons from Failure: The SoftBank-backed construction technology company aimed to vertically integrate mass timber manufacturing with modular building assembly. Despite raising $2 billion and commissioning North America's largest CLT factory in Spokane, Washington, Katerra filed for bankruptcy in 2021. The failure stemmed not from CLT technology shortcomings but from overexpansion, misaligned incentive structures, and pandemic-induced supply chain disruptions. The Spokane facility was subsequently acquired by Mercer Mass Timber, which now operates it profitably at more measured production volumes—demonstrating that the underlying technology remains viable when paired with disciplined capital allocation.

Action Checklist

Audit current wood and paper procurement to establish baseline certification percentages and identify priority suppliers for engagement
Map Scope 3 forest-related emissions using the GHG Protocol Land Sector and Removals Guidance, including harvested wood products
Evaluate mass timber specification opportunities for upcoming construction or fit-out projects, engaging structural engineers early
Develop due diligence protocols for EUDR compliance, including supplier questionnaires and geolocation verification procedures
Assess forest carbon credit quality criteria aligned with Science Based Targets initiative guidance, distinguishing removal from avoidance credits
Engage with smallholder certification programs or jurisdictional initiatives to address supply chain gaps beyond industrial forestry

FAQ

Q: How does FSC certification differ from SFI, and which should we require from suppliers? A: FSC operates a single global standard with stakeholder governance balancing environmental, social, and economic interests, with stricter requirements around old-growth protection and Indigenous consent. SFI is a PEFC-endorsed North American scheme with broader industry participation and lower certification costs but somewhat less stringent standards. For maximum credibility with European buyers and environmental stakeholders, FSC certification provides stronger assurance. For North American supply chains where SFI dominates, accepting both while tracking FSC percentage targets offers a pragmatic transition path.

Q: What is the realistic carbon storage potential of mass timber construction? A: CLT stores approximately 0.9–1.1 tonnes of CO₂ equivalent per cubic meter of product. A typical mid-rise office building using 3,000–5,000 cubic meters of mass timber could sequester 3,000–5,500 tonnes of biogenic carbon for the building's lifespan. However, lifecycle emissions including harvesting, manufacturing, transportation, and end-of-life treatment must be considered. Net-negative embodied carbon is achievable when timber comes from well-managed forests with sustained growth rates exceeding harvest and when manufacturing uses renewable energy.

Q: How should companies evaluate forest carbon credit quality? A: Quality assessment should address five dimensions: additionality (would the forest have been conserved anyway?), permanence (are there reversal risks from fire, disease, or future land-use change?), leakage (does protection here shift deforestation elsewhere?), measurement accuracy (is baseline deforestation properly established?), and co-benefits (does the project support biodiversity and community livelihoods?). Third-party rating agencies including Sylvera, BeZero, and Calyx Global provide project-level assessments, while registry standards like Verra VCS, Gold Standard, and ART-TREES offer baseline due diligence.

Q: What are the main barriers to smallholder forest certification? A: Certification costs—including initial audit fees, annual surveillance audits, and documentation requirements—typically exceed $3,000–8,000 annually, which is prohibitive for individual smallholders. Group certification models can reduce per-hectare costs but require organizational capacity. Additionally, complex chain-of-custody requirements create logistical challenges for aggregating smallholder timber into certified supply streams. Emerging digital verification technologies and landscape-level certification approaches aim to address these barriers, but solutions remain incomplete.

Q: How does the EU Deforestation Regulation affect biomaterials sourcing? A: The EUDR, effective December 2024 for large operators, requires importers and EU producers to document that timber (as well as palm oil, soy, cattle, cocoa, coffee, and rubber) was not produced on land deforested after December 2020. Compliance requires geolocation coordinates for all sourcing locations, due diligence assessments, and annual statements. Third-party certification alone does not guarantee compliance—companies must implement traceability systems capable of linking finished products to specific forest parcels and demonstrating deforestation-free status through satellite monitoring verification.

Sources

Forest Stewardship Council, "Facts and Figures – December 2024," FSC International, 2024.
Programme for the Endorsement of Forest Certification, "PEFC Global Statistics," PEFC International, December 2024.
Ecosystem Marketplace, "State of the Voluntary Carbon Markets 2024," Forest Trends, 2024.
Nature Sustainability, "Leakage and spillovers from avoided deforestation programs: A systematic review," Vol. 7, 2024.
Science Based Targets Initiative, "Forest, Land and Agriculture Science-Based Target Setting Guidance," 2023.
European Commission, "EU Deforestation Regulation Implementation Guidance," Official Journal of the European Union, 2024.
International Energy Agency and United Nations Environment Programme, "2024 Global Status Report for Buildings and Construction," 2024.
Churkina, G., et al., "Buildings as a global carbon sink," Nature Sustainability, Vol. 3, 2020.