Unit 7: Supply Chain Transparency — preparing SMEs for new expectations

Unit 7 explains what supply chain and value chain mean, why transparency matters, and how micro-SMEs can prepare for requests from larger customers under the EU’s new sustainability rules. It sets out the basics of CSRD (reporting) and CSDDD/CS3D (due diligence), practical steps to avoid “cascade” risks, and short case studies.

What this unit covers

• Why transparency matters: ethical and sustainable sourcing across value chains; how larger firms pass requirements to smaller suppliers. Unit 7 Supply Chain Transparency
• Key EU directives: CSRD (reporting) and CSDDD/CS3D (due diligence) and who is directly in scope. Unit 7 Supply Chain Transparency
• Direct vs indirect obligations for micro-SMEs: what customers may ask you to provide or adopt. Unit 7 Supply Chain Transparency
• First steps for SMEs: map risks, organise data, and draft an action plan. Unit 7 Supply Chain Transparency
• Case studies: packaging recycling (Ecoembes), certified wood in construction (PEFC project certification), and medicines take-back (SIGRE).

Learning outcomes

By the end of Unit 7, learners will be able to:

• Explain the difference between a supply chain (product/material flows) and a value chain (all upstream/downstream relationships, including services and labour). Unit 7 Supply Chain Transparency
• Summarise what CSRD and CSDDD/CS3D require from large companies and how this creates indirect asks for smaller suppliers. Unit 7 Supply Chain Transparency
• List the typical information a micro-SME may be asked to share (policies, data, codes of conduct) and why. Unit 7 Supply Chain Transparency
• Start a simple transparency plan to protect contracts and access to finance and tenders.

Key ideas in plain terms

1) Supply chain vs value chain

• Supply chain: movement of components and goods from supplier to manufacturer to distributor to customer.
• Value chain: wider view of all business relationships (direct/indirect), including services, contractors, and employment practices.

2) Two core EU rules you will hear about

• CSRD — Corporate Sustainability Reporting Directive: standardises what large companies report on environmental and social impacts, including parts of their upstream and downstream value chain. Think “information”. Unit 7 Supply Chain Transparency
• CSDDD/CS3D — Corporate Sustainability Due Diligence Directive: requires large companies to identify, prevent, and mitigate adverse impacts on human rights and the environment across their chain of activities. Think “action”.

3) Who is obliged — and how this touches SMEs

Large EU and listed companies (and some non-EU firms with EU turnover) are directly in scope. Micro-SMEs are not directly obliged, but will feel indirect effects when customers ask for data, adherence to a code of conduct, and evidence of controls. Unit 7 Supply Chain Transparency

4) Why “first steps” matter

If small suppliers cannot provide basic transparency, they risk losing contracts, facing finance limits, or missing public procurement and grants.

Step-by-step: getting ready for supply chain requests

1. Map your value chain
   List your key inputs, suppliers, and subcontractors. Note any higher-risk areas (materials, labour, waste). Unit 7 Supply Chain Transparency
2. Gather essential policies and data
   • Policy statements (environment, human rights, health & safety).
   • Basic KPIs (energy, waste, incidents), and any certifications.
   • Records for traceability (what, from whom, when). Unit 7 Supply Chain Transparency
3. Adopt a simple code of conduct
   Align with customer expectations (labour standards, environment, ethics). Share it with your own suppliers. Unit 7 Supply Chain Transparency
4. Write a short action plan
   Identify top risks and practical actions (e.g., safer chemicals, better waste handling, supplier checks). Assign owners and timelines. Unit 7 Supply Chain Transparency
5. Make information easy to share
   Keep a one-page overview and a small evidence pack ready for tenders and customer questionnaires. Unit 7 Supply Chain Transparency
6. Seek support
   Larger customers under CSDDD are expected to help SMEs (guidance, tools, training). Ask for available templates and hotlines.

Case snapshots

• Ecoembes (Spain, packaging): thousands of SMEs improved packaging recyclability, added recycled content, and cut material use — saving >60,000 tonnes of raw materials and avoiding nearly 1 million tonnes of CO₂, with 4+ billion containers improved. Unit 7 Supply Chain Transparency
• PEFC Spain (construction wood): project certification lets non-certified micro-contractors work under a prime contractor’s certified “umbrella”, ensuring traceability from forest to site and visibility of sustainable practice. Unit 7 Supply Chain Transparency
• SIGRE (medicines take-back): a national scheme that engages 100% of pharmacies (mostly micro-SMEs) to collect unused medicines, train staff, and prevent harmful waste entering the environment.

Practical activities you can use tomorrow

• Supplier checklist (30 minutes): ask each key supplier for a contact, a simple policy, and one improvement action this year. Unit 7 Supply Chain Transparency
• Traceability drill: pick one product and track inputs back two tiers; note data gaps. Unit 7 Supply Chain Transparency
• Mini code of conduct: one page covering labour, environment, and ethics; send with new POs. Unit 7 Supply Chain Transparency
• Risk register: top five risks, current controls, next action, owner, due date. Unit 7 Supply Chain Transparency

Measures that matter (keep it simple)

• Coverage: % of suppliers with a named contact and basic policy.
• Traceability: % of purchases with two-tier visibility.
• Improvements: number of supplier actions completed per quarter.
• Incidents: issues reported/resolved.
• Credentials: relevant certifications or labels in place.

Assessment (sample questions)

• What is the main difference between a supply chain and a value chain?
• What does CSRD mainly require from large companies?
• How does CSDDD/CS3D differ from CSRD?
• What obligations do micro-SMEs typically face in practice?
  (Answers align with the unit’s answer key.)

Key terms at a glance

Supply chain, value chain, SME/micro-SME, adverse environmental impact, adverse human rights impact, business relationship, established business relationship, stakeholders.

How to use Unit 7 in your business or classroom

Monthly check-in to update the risk register and track supplier actions. Unit 7 Supply Chain Transparency

60–90 minute workshop to map suppliers and start a mini code of conduct.

One-page pack with policies, KPIs, and contact details for tenders.