The construction industry needs to transition toward more sustainable materials to reduce environmental impacts. Insulation materials reduce energy demands of buildings, yet traditional options often have high embodied carbon and rely on finite resources. Mycelium-based composites (MBCs) have emerged as promising bio-based alternatives, formed by the colonisation of fungal mycelium on lignocellulosic feedstocks; the mycelium acts as a natural adhesive and upon drying an inert material is produced. MBCs have demonstrated low thermal conductivity ( \(\lambda\) ) and sustainability benefits, with substrate choice being a key factor in determining both thermal and environmental performance. This study emphasises the need for a functional unit (FU) that accounts for thermal performance rather than mass-based declared units (DUs) in Life Cycle Assessment (LCA). MBCs were produced using Lentinus tigrinus mycelium and five different substrates: ash-wood chips, bark, beech-wood sawdust, hemp shiv, and wheat straw. Thermal conductivity measurements (ASTM C518) were conducted, revealing that ash-wood chip MBCs exhibited the highest thermal conductivity ( \(\lambda\) = 0.048 W/m \(\cdot\) K), while straw-based MBCs had the lowest ( \(\lambda\) = 0.031 W/m \(\cdot\) K). Thermal conductivity and density of the material were used to calculate the FU (mass of insulation required to achieve an R-value of 1 m \(^2\) K/W). A cradle-to-gate LCA (EN 15804) compared environmental impacts per FU for each MBC produced at lab-scale. Ash-wood chip MBCs demonstrated the lowest total global warming potential (GWP) (-9.77 kg CO \(_2\) eq), while straw-based MBCs had the highest (4.04 kg CO \(_2\) eq). Further analyses examined whether transport distance, waste designation, and carbon sequestration uncertainty would affect substrate ranking and, consequently, selection. While local sourcing and waste-derived substrates reduced emissions, it did not alter rankings. A Monte Carlo analysis confirmed that even with uncertainty in substrate carbon sequestration, MBCs maintained low GWP values. These findings show that low \(\lambda\) MBCs can be produced from various substrates. Substrate selection should consider thermal and environmental performance, as carbon sequestration, rather than \(\lambda\) , is the dominant factor influencing GWP. This underscores the need to consider broader environmental trade-offs when optimising MBC insulation materials.
