Sheathing is the structural covering applied to studs and joists that serves as a base for a building's weatherproof exterior.

• Structural insulated panel construction provides interior and exterior sheathing, as well as insulation, in pre-cut panels
• Designs that combine bracing with non-structural sheathing can provide necessary strength while enhancing insulation and reducing wood requirements.
• Consider salvaged, remanufactured, or FSC certified wood products.
• Oriented Strand Board (OSB) relies on smaller trees, a more rapidly renewable resource than mature timber for plywood.
• Consider structural-grade high-recycled-content fiber board for rated applications.
• Structural-grade fiber-cement composite siding can act as both sheathing and an exterior weathering surface in a single component.
• Under brick and stucco exterior finishes, water-resistant exterior-grade gypsum sheathing can be an option to reduce wood requirements.
• Consider designing for disassembly, so materials can be readily reused or recycled.
  For example:
  • Materials attached with removable fasteners (in appropriate designs) are more readily deconstructed than materials installed with adhesives.
  • On the other hand, adhesives distribute loads over larger areas than fasteners alone.

Sheathing is one of the two most wood-intensive elements of wood-frame construction, most commonly plywood or oriented strand board (OSB.) Wood is a renewable product , and requires less energy than most materials to process into finished products. However, the logging, transport, and disposal of wood have substantial environmental impacts. Standard logging techniques lead to erosion and fouling of streams and waterways with sediments, lead to loss of carbon stored in soil, damage sensitive ecosystems, and reduce biodiversity. Minimizing wood use is the key to reducing these impacts, through a combination of substitute materials, selection of wood from responsibly managed forests, and design and construction practices that control waste and minimize redundant components.

The range of viable alternative materials varies with application. Structural fiberboard products rated for structural ceiling and roof installation are worthy of consideration. Homasote's 100% recycled nailable structural board for roofing and ceilings is one example. Structural-grade fiber cement siding can combine sheathing and cladding in a single component, providing both shear strength and protection from the elements. Though more expensive than OSB or vinyl siding alone, structural fiber cement is highly durable, and combining siding with sheathing reduces labor costs.

Forest Stewardship Council (FSC) certification is a widely recognized and respected standard for responsible forest management. FSC labeled products are certified as produced from responsibly managed forests, and plywood and siding are among the growing range of FSC certified products carried by two or more suppliers in the Monterey Bay region. Note the FSC's use of the term, ‘responsibly managed,’ rather than ‘sustainable.’ Though sustainable (or even environmentally beneficial) products are the goal, and FSC standards are a well-regarded indicator of environmental performance, overall forest sustainability is open to debate and is perhaps a rarely attainable goal.

FSC certification is desirable feature in a wood product, but minimization of waste and overall wood use is also critical to sustainable design. See Construction Waste Minimization and Deconstruction for more details. See Wood Panels for additional information on common panel types, such as OSB, plywood, and MDF.