It is recommended (mustahabb) to shroud the deceased in white cloth

Praise be to Allah.

The Sunnah is to shroud the deceased in white cloth, because of the report narrated by Ibn ‘Abbas (may Allah be pleased with him), who said: The Messenger of Allah (blessings and peace of Allah be upon him) said: “Wear white garments, for they are among the best of your garments, and shroud your dead in them.” Narrated by Abu Dawud (3878); classed as sahih by al-Albani in Sahih Sunan Abi Dawud.

It was narrated that Samurah ibn Jundub said: The Messenger of Allah (blessings and peace of Allah be upon him) said: “Wear white, for it is cleaner and purer, and shroud your dead in it.” Narrated by at-Tirmidhi (2810); classed as sahih by Shaykh al-Albani (may Allah have mercy on him).

It was narrated from ‘A’ishah (may Allah be pleased with her) that the Prophet (blessings and peace of Allah be upon him) [was shrouded] in three pieces of white cloth. Narrated by al-Bukhari (1264) and Muslim (941).

An-Nawawi (may Allah have mercy on him) said: “White” indicates that it is recommended (mustahabb) to shroud the dead in white, and there is scholarly consensus on that.

End quote from Sharh Muslim.

If a person is shrouded in something other than white cloth, it is permissible, but it is disliked (makruh).

An-Nawawi (may Allah have mercy on him) said: It is disliked to use dyed cloth and the like that are worn as adornment. End quote.

In al-Mawsu‘ah al-Fiqhiyyah (13/238) it says: It is also disliked to shroud the dead in cloth dyed with saffron or safflower, or cloth made of camel hair or wool, when  it is possible to use something else, because that is contrary to the practice of the early generations (salaf). End quote.

And Allah knows best.