Making wool is a normal and natural activity for sheep that they don't suffer or die from, so using wool isn't an ethical issue.
Essentially all wool comes from sheep sheared on industrial farms, which often involves very rough handling of the sheep and is a process which inflicts painful nicks and cuts on the sheep's skin. These injuries attract flies and promote "flystrike", especially around their tail where the skin bunches up. To combat this, two strips of wool-bearing skin from around either side of the sheep's buttocks are removed, without using anesthetics, in order to create a scarred area of flesh that's less susceptible to infestations. This process is call "mulesing". It is also important to remember that there are no "old-animals" homes for animals that are no longer profitable to industry, and sheep are no exception. When they age and no longer produce as much wool they are shipped to the slaughter house, and this happens long before their natural lifespan. It's clear that sheep are very much hurt by all of this.
Like any animal used by agribusiness, the abuses of sheep has many different facets. Sheep in the wool industry are selectively bred specifically to have more wrinkled skin so that they produce more wool, and this makes them more vulnerable to injuries during shearing and consequently causing more incidents of "flystrike". This creates greater profits for the industry while imposing negative consequences on the sheep themselves, which makes wool production a very typical example of how animal exploitation industries take advantage of the vulnerabilities of others in ethically indefensible ways. Put differently, in order to use wool for ourselves, we must decide that the satisfaction of our own desires is somehow more important than the rights and needs of others. By contrast, the philosophy of veganism denies the validity of any line of thinking which seeks to justify abusing others for our own gain.
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