Capital goods emissions refer to the greenhouse gas (GHG) emissions associated with the production, transportation, and end-of-life disposal of long-term assets that an organisation purchases for its operations. These assets typically have a lifespan of more than one year and are essential for the functioning of a business. Capital goods emissions fall under Scope 3 emissions, an indirect emissions category, and can contribute significantly to an organisation's overall carbon footprint.
Capital goods include items like machinery, equipment, vehicles, office furniture, and buildings. Since these assets are often large and resource-intensive to produce, the emissions linked to their manufacture and transportation can be substantial.
When discussing Scope 3 emissions, it’s important to differentiate between capital goods and purchased goods and services, as it's easy to mix the two up!
Capital Goods are long-term assets that an organisation uses over several years. These emissions are recorded under Scope 3, Category 2. Purchased Goods and Services, on the other hand, refer to the consumables and services an organisation buys regularly to support daily operations. Examples include office supplies, raw materials, and outsourced services like cleaning or IT support. The emissions associated with these purchases fall under Scope 3, Category 1, and relate to the production, transport, and use of these shorter-term items.
Tip: The key distinction lies in their lifespan: capital goods are durable assets that are used long-term, while purchased goods and services are consumed more rapidly in day-to-day business operations.
Capital goods emissions are relevant across virtually all sectors, including:
Measuring emissions from capital goods offers several important advantages for organisations. First, it enables businesses to gain a more complete understanding of their total environmental impact, which is crucial for accurately reporting on sustainability initiatives. Since capital goods often represent a significant investment, knowing their emissions can help organisations make more informed choices about the assets they acquire, favouring more sustainable alternatives when possible.
Additionally, measuring capital goods emissions can highlight opportunities to extend the lifecycle of these assets. For example, organisations may identify ways to maintain or upgrade existing equipment rather than purchasing new items, reducing the need for additional manufacturing and transportation emissions.
Organisations can also use this data to support procurement strategies that prioritise suppliers with lower-carbon production processes or materials. Opting for energy-efficient buildings or vehicles, for instance, can reduce long-term operational emissions and align with broader sustainability goals.
Finally, measuring capital goods emissions helps businesses comply with growing regulatory requirements for Scope 3 emissions reporting. It also enhances transparency, demonstrating to stakeholders that the organisation is committed to reducing its environmental footprint across all areas of its operations.
FutureTracker provides comprehensive support for organisations in every aspect of measuring and managing their emissions, including capital goods emissions. Our emissions calculator and guidance library simplifies the process, making it easy for your organisation to identify sources of emissions, quantify their impact, and develop targeted strategies to reduce them effectively.
If you’d like to learn more about FutureTracker, get in touch with us at enquiries@futuretracker.com or learn more about our plans and pricing here.
