Key takeaways on Canopy investment in circular packaging materials
- Global wood supply chains are tightening due to rising multi‑sector demand and climate‑driven disruptions.
- Canopy has launched a $2bn blended‑finance initiative to scale circular, next‑gen textile and packaging production in India.
- Increasing regulation, including the upcoming EU Deforestation Regulation, is raising the stakes for brands relying on forest‑derived inputs.
- Beauty and personal care brands face significant business‑continuity risks unless they diversify inputs and adopt circular, next‑gen materials.
- Canopy launches $2bn initiative to accelerate next‑gen material production in India
At the World Economic Forum in January 2026, the non-profit Canopy announced the launch of its $2bn (€1.67bn) blended‑finance project that aims to accelerate circular, sustainable production of next‑generation textile materials in India.
The initiative brings together brands, investors, philanthropies, international organisations, and government representatives, with an initial focus on scaling investment in sustainable textiles and next‑gen alternatives in India, which is backed by the Indian government.
Global fibre supply faces mounting pressure from rising demand
Canopy, which works with more than 1,000 brands to protect forests and advance low‑carbon, circular supply chains across key industries, said the initial investment will enable the first 1.5 million tonnes of next‑generation paper, packaging, and textile production capacity in India.
It forms part of a broader global initiative to propel $78bn (€65.24) into the global infrastructure transition by 2033.
“Global wood supply chains are under pressure because demand is rising sharply across multiple sectors at the same time (often competing for the same fibre basket) while the pool of genuinely low‑risk, responsibly sourced wood is tightening and often already spoken for,” explained lead researcher at Canopy Dr Neil D’Cruze.
“On the demand side, we’re seeing a surge of “wood appetite” across the economy. Packaging demand continues to grow, while paper‑based products are being positioned as alternatives to plastics in a range of applications.”
According to D’Cruze, at the same time, the construction sector is scaling engineered wood and mass timber, drawing significant new volumes into buildings and infrastructure. This, combined with the pull from bioenergy and biomass in some markets (where wood is typically treated as a renewable input), means multiple demand drivers are converging on the same forests. “The result is intensified risk of competition, price volatility, and more pressure on the world’s remaining intact and climate‑critical forest ecosystems,” he said.
Climate impacts and regulation are reshaping material sourcing
D’Cruze explained that on the supply side, climate impacts are already disrupting availability and reliability. “Wildfires have driven major losses of industrial roundwood over the past two decades, and the broader trend of rising fire risk, pests, pathogens, and drought increases the risk of volatility and cost across key producing regions,” he said. “Add land competition (where forest landscapes are increasingly squeezed by agriculture and other uses) and it’s clear why “more supply” isn’t a simple lever to pull,” he said.
The market for certified, verifiably low‑risk fibre is also tightening fast. Much of the best supply is effectively pre‑allocated through existing relationships and commitments, leaving less room for new demand to access credible material.
Meanwhile, regulations and due‑diligence expectations are tightening globally, particularly around deforestation‑free and degradation‑free supply chains, which is turning responsible sourcing into a market‑access requirement. For example, the EU Deforestation Regulation is set to come into force in December 2026.
These regulations and due‑diligence expectations are likely to further intensify competition for traceable, compliant inputs.
“Businesses that can’t prove low-risk origin and traceability face higher legal, operational, and reputational exposure, along with potentially lost customers and contracts,” said D’Cruze.
In short: demand is accelerating across sectors, while credible supply is climate‑disrupted, land‑constrained, and increasingly spoken for — which is exactly why beauty and personal care brands need to pair robust responsible sourcing with a serious push toward circular and next‑gen alternatives.
Why beauty brands should accelerate next‑gen and circular materials
For brands and manufacturers, this is a business‑continuity challenge and not just an environmental challenge, says D’Cruze. “As competition intensifies, companies can expect higher input costs, supply disruption risk, and greater exposure to price volatility,” he said. “And those shocks aren’t theoretical: extreme weather and wildfires are already affecting wood availability and reliability in key regions.”
Canopy works with over 950 brands that have already committed to eliminating Ancient and Endangered Forests from their supply chains, including major groups like LVMH and a growing set of beauty and personal care leaders such as Cheekbone Beauty and Vanity Group, and moving to lower‑impact next‑gen alternatives.
That momentum matters because it shows the market is shifting, and early adopters will be best positioned for the future.
