The wool industry is very complex and confusing. It is very difficult, if not impossible, to find out where your wool comes from. Let alone knowing whether it has been worked in an environmentally conscious manner, whether the farmer has been properly rewarded and how the sheep live and are treated. There is beautiful wool from small, consciously working farms, which I also want to work with in the future, but their way of working does often require prices that are not accessible to everyone.
For now I am very satisfied with the GOTS-certified Shetland wool from BC Garn, although it is not really from Shetland, but from Argentina. This wool is quite similar to Shetland wool (hence the name) and is therefore very suitable for colourwork (like Fair Isle or Jacquard). To extend colour choices I also use Holst supersoft. Although this is not an organic yarn, it is non-mulished and these two yarns work well together.
These yarns also work well on the knitting machine. They can be used single or double-threaded and are available in a wider range of colours. The price is such that this wool will be accessible to many people.
The GOTS-certified Loch Lomond Lace yarn, also from BC Garn, is a tweed-like, carded yarn. It is light and airy, but not so tear-resistant than a worsted yarn. That's why I recommend avoiding knitting with it too tight. Its origine is also South America.
GOTS-certification requires environmentally conscious working in many ways. The company behind the wool from BC Garn (only after the sheep themselves, of course) is the company Fuhrmann.
Of course all yarns I use and design with are mulesing free.