Trees in the Greenhouse: Why Climate Change is Transforming the Forest Products Business

The world is entering an era when natural resource constraints, environmental policies, and shifting consumer values will create unprecedented demands on the private sector. Recent spikes in the prices of energy and food commodities illustrate the dynamic forces that are changing the world. In this new business context, the concept of “creative destruction”—a process by which innovation builds long-term value even as it destroys the value of the status quo—may extend beyond individual companies and apply to whole industries.

One example is the forest products business. What was once a simple business of turning trees into lumber and paper is now uniquely positioned—or exposed—to political and economic forces that are reshaping regulatory and market landscapes. Can this industry take a new position as a sustainable producer of fiber, energy, and materials to meet the world’s growing needs? And can the industry be a supplier of ecosystem services—the valuable benefits provided by nature—such as carbon storage?

The forest products industry has a unique opportunity to provide sustainable solutions to climate change, but clear, long-term climate policies are necessary to realize this opportunity. Nonetheless, the industry is fragmented and, in many cases, divided over what represents appropriate climate policies.

This report provides insights into the complex array of issues related to climate change. It will help companies, investors, and the sector as a whole to develop a more proactive and informed position on climate change policies and what constitutes an effective business response.

With the right regulatory frameworks in place, both internationally and nationally, the forest products industry could be a major solutions provider to climate change while seizing some of the greatest market opportunities of the 21st century.