A new bio-polyol based on white mustard oil (Synapis alba) and 2,2′-mercaptodiethanol (2,2′-MDE) was obtained. The synthesis was carried out by two-step method. In the first stage, the double bond of the unsaturated fatty acid residues was oxidized, and in the second step the epoxy rings were opened with 2,2’-MDE. The properties of the obtained bio-polyol for application as raw material in polyurethane-polyisocyanurate foams (PUR-PIR) - hydroxyl number, acid number, density, viscosity, pH, water content, FTIR, 1H NMR and 13C NMR were investigated. Based on the obtained results, foaming formulations containing 0 to 0.6 R of the new bio-polyol were prepared. Significant impact of bio-polyol on apparent density, compressive strength, brittleness, flammability, water absorption and thermal conductivity of polyurethane composites were noted. Modified foam had better functional properties than reference foam e.g. lower brittleness, better thermal insulation properties and better fire resistance.