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Capital goods emissions, classified under Scope 3 Category 2 of the Greenhouse Gas (GHG) Protocol, refer to the indirect emissions associated with the lifecycle of capital goods acquired or disposed of by a reporting company. Capital goods are long-term assets such as buildings, machinery, and equipment used to produce goods and services. Unlike purchased goods and services consumed within the operational year, capital goods have a lifespan extending over several years.
The emissions from capital goods encompass all lifecycle stages, from raw material extraction, manufacturing, transportation, and installation to their end-of-life disposal or recycling. Given the durable nature of these assets, the emissions are typically amortised over the useful life of the capital goods rather than accounted for entirely in the year of purchase.
Accounting for emissions from capital goods is crucial for a comprehensive understanding of a company's indirect environmental impacts. It helps companies identify significant sources of emissions beyond their immediate operations and energy use, offering insights into potential areas for emissions reduction and more sustainable capital investment strategies. This category also encourages companies to consider the embodied carbon in their capital investments and to engage with suppliers on sustainability issues related to producing capital goods.
Learn more about Scope 3 emissions. Understand the business benefits of implementing emission reduction strategies with our dedicated Whitepaper "Return on Investment of decarbonisation."
