The skipper was given permission to speak to the City Ground club after they made an initial approach for his services in the recent transfer window.
It is understood Albion offered Dunk the option of talking to Forest out of respect for what he has done for the club and the opportunity they were offering and that they made their reasoning clear to him.
The Argus understands Forest were offering a financially attractive deal running until the summer of 2028,
But Dunk, who turned 34 last November, decided to stay with his local club, where he is currently committed until the end of next season.
His current task is to help Albion end a run of one league win in 12 games which has caused unrest among fans.
Dunk stepped up after the home defeat by Crystal Palace to offer Fabian Hurzeler his support via the broadcast media and to demand more from the players.
He told Sky Sports: “I don’t think as a group of players at the moment we are doing enough. We are not good enough.
“The gaffer has taken responsibility but we have to take responsibility as a group.