Your company may not buy machines or buildings every year. But in the year when you build a new plant or modernise a line, capital goods can change your whole carbon footprint. The GHG Protocol counts all their emissions in the year you buy them. It does not spread them over their lifetime.
- Scope 3 category 2, capital goods: emissions from making the buildings, machines, equipment and vehicles that you bought in the reporting year.
- Not their use: fuel and electricity used by these assets belong to Scopes 1 and 2.
- Methods: the same four methods as for purchased goods and services.
- Reduction: include emissions in investment planning and in purchasing criteria.
What does category 2 include?
Category 2 covers emissions from the production of capital goods that your company bought or acquired. These include buildings, equipment, machinery, vehicles and their upgrades.
A company uses capital goods to make a product, provide a service, or sell, store and deliver goods. They usually have a long working life.
This category includes only emissions from the production of these goods. Emissions from their use belong elsewhere. For example, fuel used by machines or vehicles goes to Scope 1, and the electricity they use goes to Scope 2.
For which companies does category 2 matter?
Capital goods are often not a large share of emissions every year. But when you build a new plant or carry out a major upgrade, check the new equipment. How efficient is it, and what is it made of?
Calculation methods
The calculation methods for category 2 are the same as for category 1 (purchased goods and services). There are four methods:
- Supplier-specific method: you use the supplier's greenhouse gas inventory data for the goods you buy, collected on a cradle-to-gate basis. Cradle to gate means from the extraction of raw materials until the product leaves the supplier's gate.
- Hybrid method: you combine the supplier's Scope 1 and 2 data and waste data with emission factors for the materials used. These factors usually come from commercial LCA databases. This method suits more experienced ESG specialists.
- Average-data method: you collect data on the goods you buy, for example their mass or number of units. Then you multiply it by emission factors from public or commercial LCA databases.
- Spend-based method: you collect data on the economic value of the goods you buy. Then you multiply it by emission factors per unit of money.
Where do you find the data for this category?
First, collect data on what your company buys. Then choose an emission factor. The data for category 2 comes from suppliers or from LCA databases. You need two types of data.
Primary, supplier-specific data:
- product carbon footprint data on a cradle-to-gate basis;
- Environmental Product Declarations (EPDs) of products for modules A1 to A3.
This is the same set of data that you ask for in category 1. Our supplier carbon footprint data checklist with an email template helps you collect it.
Secondary, estimated data:
- industry-average emission factors per amount of material, from life cycle inventory databases;
- industry-average emission factors per unit of money spent, from emission factor databases.
What are the main challenges in category 2?
Two challenges come up most often:
- With little data, it is hard to calculate the emissions of capital goods well.
- You do not buy capital goods often, but one of them can raise emissions a lot. This makes it harder to follow your reduction strategy.
How to reduce emissions in Scope 3 category 2?
These steps help you cut emissions from capital goods:
- Include emissions in your investment planning.
- Use the carbon footprint as one of your criteria when you buy.
- Set an internal carbon price. It shows how your choice of capital goods, suppliers and supply chains affects emissions.
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