Well when the Kypiq make their homes, they need to use a small amount of wood. Any excess could also be made into paper for contracts. It probably wouldn't be enough paper, but you could try that.

Someone else on the Discord pointed out that we could use the hide from animals who already died. Those are two good solutions. However, if there is a way to make contracts with a nature friendly material, that would be great.

How about some papyrus or rag paper?

what about silk sheets ? or on bark or clay tablets or paper from hemp fiber, lots and lots of options

Using silk to write sounds a lot like spoiling the silk in my opinion x)

Use cotton. Or collect fallen sticks. Or any scrap plant material that is fiberous.

There is always Rice Paper or a paper made of a crop material, though they tend to be more fragile that hide or thicker pulp materials paper.

All sorts of options exist, including silk or other fabric, mulberry bark (you're raising silkworms anyway), other plant fibers, stone such as slate, etc. Do not agree that found dead animals would be a good source of hide!

As the others have so helpfully noted, in real life paper is made from a variety of materials, some of which include;

Sugarcane Papyrus Straw Rice plant Bamboo Hemp Flax Corn husk Textile waste Cotton & cloth

Now, that's not necessarily to say that these alternative methods of making paper will make it into CoE, but there are certainly alternatives in real life. Love that you're thinking of the ethics of crafting in CoE - it's one of the things that makes the game so unique!