Forests cover 31% of Earth’s land and are vital for climate regulation, water cycles, biodiversity and human livelihoods. Forest sector companies manage around half of the world’s forests for production, making them key players in sustaining ecosystem services while meeting demand for wood products.  

However, nature loss poses material risks to businesses, especially in forestry, which relies heavily on healthy ecosystems and operates on long-time horizons. At the same time, the forest sector faces some unique opportunities and is well-positioned to grow the circular bioeconomy based on wood from sustainable working forests as a renewable and recyclable material. 

The sector’s value chain includes all economic activities that generally depend on the production of goods and services from forests. It has three successive stages:  

1. Forest production; 
2. Processing and manufacturing;
3. Downstream.  

The value chain mapping aligns with TNFD’s Additional Guidance by sector and working group members refine it through their input. 

A sector-level overview of dependencies, impacts, risks and opportunities (DIROs) provides a useful foundation for a company-level materiality assessment because it highlights the typical DIROs relevant to companies operating in the same sector.  

The DIROs capture how businesses in a sector interact with nature – relying on and impacting ecosystem services – and how these translate into risks and opportunities.  

Companies should do a company-level materiality assessment – as recommended by the Natural Capital Protocol, SBTN and TNFD frameworks – to evaluate how the potential sector-level DIROs apply to the specific context of that company. The materiality assessment provides greater visibility into the company’s relationship with nature, enabling it to: 

• Identify and manage risks; 

• Uncover new business opportunities; 

• Respond effectively to evolving investor and regulatory expectations.  

This ultimately helps future-proof the business.  

Methodologies for company-level materiality assessments include the Taskforce on Nature-related Financial Disclosures Guidance on the identification and assessment of nature-related issues: the LEAP approach and Science Based Targets Network’s Step 1: Assess your impacts on nature.  

A sector-level overview of dependencies and impacts provides a useful foundation for a company-level materiality screening. It highlights the typical dependencies and impacts relevant to companies operating in the same sector.  

Below are the top dependencies and impacts identified for the forest sector.  

The tables below present potential dependencies and impacts for the forest product supply chain.  

The first one is an overview of the goods and services provided by nature that forest companies highly depend on in the forest production and processing, and manufacturing stages of the supply chain.  

The second one provides an overview of the potential impacts on nature along the forest products supply chain.  

Conservative scenarios are generally the basis for theoretical sector-level overviews like these to ensure no dependencies or impacts remain overlooked.  

Individual companies should conduct company-specific materiality assessments to assess the relevance of these dependencies and impacts in specific locations across their full supply chain.  

The materiality ratings in the tables are based on the 2018–2023 version of the ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) database.  

Nature-related issues can affect every part of a business – from physical and operational disruptions to transition pressures like new regulations, litigation and reputational risk, and even systemic threats as ecosystems start to fail.  

Companies that respond proactively by transforming business models, products, services and investments can leverage those same forces. They can gain a competitive edge, strengthen investor and stakeholder confidence, and build the operational resilience needed to thrive in a changing world.  

The table below outlines examples of key risks and opportunities for the forest sector, based on the TNFD framework.  

• To learn more, read the full Forest Sector Nature-Positive Roadmap and Business for Nature’s corresponding overview for the Forest sector.
• For more technical details, refer to the Methodology page.