Thermal paper presents widely recognized health hazards due to its formulations containing bisphenol A (BPA) and bisphenol S (BPS) as color developers with limited research on safer alternatives. Here, we introduce sustainable thermal paper formulations built with functionalized lignin polymers and lignin-derived esters, combined with a sensitizer derived from xylan. Light-colored lignin polymer was obtained via sequential aldehyde-assisted fractionation, which reduced chromophore concentration through multiple extraction cycles. Good performance was achieved with polymeric lignin (color density at 120°C ≈ 0.8 to 1.1) when combined with xylan-derived diformylxylose (DFX), each of which is produced directly by simple biomass fractionation. Coatings remained stable for over a year under ambient conditions. Last, lignin-based developers showed estrogenic activity that was two to three orders of magnitude lower than BPA and one to two orders of magnitude lower than BPS, while the DFX sensitizer showed no signs of estrogenic activity or toxicity to bacteria or algae.