I get this question all the time, and my answer hasn't changed in the fifteen years since the first time it was asked: it's as green as viscose rayon made from any other material. Rayon (called viscose outside the U.S.) is a regenerated cellulose fiber, made from unspinnable waste cotton, wood pulp or other plant material -- such as bamboo. It is as "natural" as Spam, because in order to create a usable fiber, the plant material is chemically dissolved using a process so dirty that it is no longer made in the U.S. and the remaining sites where it was made are some of the nastiest "superfund" sites on the EPA's clean-up list. (See the “American Viscose Corporation" link below for the whole sad saga.)
My daily news alerts bring in dozens of articles and announcements touting bamboo yarn, diapers, skirts and other products as green, environmentally friendly and sustainable. I also see lots of products labeled simply as “bamboo”, despite the fact that textile labeling regulations in the U.S. require that they use "rayon" if a product is made of regenerated cellulose using the viscose process. The FTC does not recognize "bamboo" as an approved textile label. Period. The FTC is apparently not about to enforce the Textile Fiber Products Labeling Act, because, as their representative once told me, "it's not a rollover issue", i.e., no one is dying. (at least, no one in the United States)
There is a reason why the Textile Fiber Products Identification Act exists -- to protect consumers. When someone buys bamboo or soy clothing or yarn, thinking they are "natural", they are misinformed. When their mistaken belief is based on a label or online catalog blurb, that's misinformation. Until the FTC starts enforcing its own regulations, the buyer needs to beware and be wary. Finding "rayon from bamboo" or "bamboo lyocell" on the label makes me feel a whole lot more confident that the manufacturer understands the materials being used and federal labeling regulations.
If you like the feel of rayon, there are much cleaner cousins to viscose. Look for “ lyocel” or “modal” on the label -- also marketed under the brand name Tencel. These fibers are also made from regenerated cellulose, but in a closed loop process, in which the harmful chemicals are captured and reused.
If you want to know more:
DW Planet A. H&M and Zara: Can Fast Fashion Be Eco-Friendly?, 2021. https://www.youtube.com/watch?v=00NIQgQE_d4.
TEDx Talks. Α Future Sustainable Fashion System | Malin Viola Wennberg | TEDxThessaloniki, 2019. https://www.youtube.com/watch?v=i-NwdH2Wfu4.
The Business of Fashion. The BoF Sustainability Index: How Fashion Measures Up, 2021. https://www.youtube.com/watch?v=85nkPxHXThA.
TheEEBchannel. TEXTILE MOUNTAIN - THE HIDDEN BURDEN OF OUR FASHION WASTE, 2020. https://www.youtube.com/watch?v=UC4oFmX8tHw.
Washington Post. “African Nations Are Fed up with the West’s Hand-Me-Downs. But It’s Tough to Keep Them out.” Accessed January 28, 2022. https://www.washingtonpost.com/world/africa/african-nations-are-fed-up-with-the-wests-hand-me-downs-but-its-tough-to-keep-them-out/2018/05/28/c4041c8c-5478-11e8-a6d4-ca1d035642ce_story.html.
“American Viscose Corporation.” In Wikipedia, February 3, 2022. https://en.wikipedia.org/w/index.php?title=American_Viscose_Corporation&oldid=1069577955.
The Spruce. “Bamboo Flooring Really Is Eco-Friendly, in Some Ways.” Accessed February 5, 2022. https://www.thespruce.com/is-bamboo-flooring-really-eco-friendly-1314953.
H&M. “Conscious Products Explained.” Accessed January 11, 2022. https://www2.hm.com/en_us/sustainability-at-hm/our-products/explained.html.
Elven, Marjorie van. “How Sustainable Is Recycled Polyester?” FashionUnited, November 15, 2018. https://fashionunited.uk/news/fashion/how-sustainable-is-recycled-polyester/2018111540000.
“Ikea Working on Home Textiles Made from Rice Straw and Ocean Plastic | | YnFx.” Accessed January 11, 2022. https://www.yarnsandfibers.com/news/textile-news/ikea-working-on-home-textiles-made-from-rice-straw-and-ocean-plastic/.
The UN Alliance for Sustainable Fashion. “ITC Ethical Fashion Initiative (EFI).” Accessed December 28, 2021. https://unfashionalliance.org/members/itc-efi/.
Good On You. “Material Guide: What Is Viscose and Is It Sustainable?,” August 25, 2021. https://goodonyou.eco/material-guide-viscose-sustainability/.
Sachs, Lexie, and Good Housekeeping Institute. “Sustainability Experts Say There’s Actually No Such Thing as ‘Eco-Friendly’ Clothing.” Good Housekeeping, April 20, 2020. https://www.goodhousekeeping.com/clothing/g27154605/sustainable-fashion-clothing/.
The Balance Small Business. “The Basics of Clothing and Textile Recycling.” Accessed January 28, 2022. https://www.thebalancesmb.com/the-basics-of-recycling-clothing-and-other-textiles-2877780.
PSCI. “The Impact of Fast Fashion On the Environment.” Accessed January 11, 2022. https://psci.princeton.edu/tips/2020/7/20/the-impact-of-fast-fashion-on-the-environment.
The UN Alliance for Sustainable Fashion. “UN Alliance for Sustainable Fashion.” Accessed December 28, 2021. https://unfashionalliance.org/.
“What EXACTLY Is Sustainable Fashion & Why Is SO Important (2022).” Accessed December 28, 2021. https://thevou.com/fashion/sustainable-fashion/.
Cline, Elizabeth L. The Conscious Closet : The Revolutionary Guide to Looking Good While Doing Good. New York: Plume, an imprint of Penguin Random House LLC, 2019.
Elizabeth L. Cline. Overdressed: The Shockingly High Cost of Cheap Fashion. Penguin Publishing, 2012.
Rivoli, Pietra. The Travels of a T-Shirt in the Global Economy : An Economist Examines the Markets, Power, and Politics of World Trade. 2nd ed., [Rev. and Updated]. (xx, 316 pages) : illustrations vols. Hoboken, N.J.: Wiley, 2009.