Scope 3 Category 2: Capital Goods
Category 2 covers the cradle-to-gate emissions associated with capital goods purchased by the reporting company — machinery, vehicles, buildings, IT equipment, and other long-lived assets. It is separate from Category 1 (which covers consumables and services) and is often material for capital-intensive businesses.
Category 2 covers the cradle-to-gate emissions associated with capital goods purchased by the reporting company — machinery, vehicles, buildings, IT equipment, and other long-lived assets. The distinction between Category 1 (purchased goods and services) and Category 2 (capital goods) is the useful life of the purchased asset:.
Category 2 vs Category 1 — the useful life distinction
The distinction between Category 1 (purchased goods and services) and Category 2 (capital goods) is the useful life of the purchased asset:
Category 1: goods and services consumed within one year — raw materials, consumables, maintenance supplies, professional services, software subscriptions.
Category 2: goods with a useful life exceeding one year — manufacturing equipment, vehicles, office furniture, IT hardware, buildings purchased or constructed, leasehold improvements.
GHG Protocol treatment: Category 2 emissions are counted in full in the year of purchase — not depreciated or amortised over the asset life. A machine with a 20-year life that cost €1M and was purchased in 2025 is counted in full in the FY2025 Category 2 inventory. This front-loading reflects the fact that the manufacturing emissions occur when the machine is made, not when it is used.
This approach means Category 2 can be highly variable year-on-year depending on CapEx cycles. A year with a major factory expansion will show very high Category 2; a maintenance-only year will show low Category 2. Disclose significant year-on-year changes in Category 2 with an explanation of the underlying CapEx activity.
Calculating Category 2 — methods and data sources
Three calculation methods apply to Category 2, consistent with other Scope 3 categories:
Spend-based method: CapEx spend by asset category × EEIO emission factor (kg CO2e per € of asset type). Accuracy: ±50–100%. Data required: CapEx spend from financial statements, broken down by asset category (machinery, vehicles, IT, buildings). This is the most common approach for Category 2 due to data availability.
Average-data method: Number or weight of assets × emission factor per unit (kg CO2e per machine, per vehicle, per m² of building). Accuracy: ±20–50%. Data required: physical asset inventory and sector-specific unit emission factors. More accurate than spend-based for homogeneous asset types (vehicle fleets, standard IT equipment).
Supplier-specific method: Use actual lifecycle emission data published by equipment manufacturers. Many IT manufacturers (Apple, Dell, Lenovo, HP) publish Product Carbon Footprints for their hardware — these can be used as supplier-specific Category 2 factors for IT equipment purchases. Accuracy: ±5–20%.
Data sources: fixed asset register (lists all capital additions in the year with cost and asset category); CapEx approval records; and accounts payable data filtered for capital expenditure.
IT equipment — a practical Category 2 example
IT hardware is one of the most tractable Category 2 sub-categories because major manufacturers publish Product Carbon Footprints (PCFs) for their devices.
Apple, Dell, Lenovo, HP, and Microsoft all publish lifecycle carbon footprint data for laptops, desktops, monitors, servers, and mobile devices. These PCFs cover manufacturing (the Category 2 emission) plus use-phase energy consumption (which is your Scope 2 or Category 3).
For a company purchasing 500 laptops per year: manufacturer PCF data (typically 300–400 kg CO2e per laptop for manufacturing) provides a highly accurate Category 2 calculation. 500 laptops × 350 kg CO2e = 175 tonnes CO2e for the IT hardware Category 2.
For server and data centre infrastructure: server PCFs are available from major vendors. Cloud infrastructure (AWS, Azure, GCP) is more complex — the Category 2 emission from the data centre hardware used to provide cloud services is partially allocated to cloud customers, but most cloud providers do not yet publish per-customer Category 2 data. Use spend-based EEIO factors for cloud services in Category 1 (services, not capital goods).
Frequently asked questions
Do we include buildings we construct in Category 2?
Yes — construction of new buildings and leasehold improvements are Category 2. The embodied carbon of construction (materials and construction process emissions from contractors) is counted in Category 2 in the year the building is completed and occupied. For companies with significant construction programmes, Category 2 from buildings can dominate the total.
We lease most of our assets — do we still have Category 2?
If you lease assets (operating leases), the assets are not purchased capital goods — they are Category 8 (upstream leased assets). If you finance assets through finance leases (where you bear the risks and rewards of ownership), these are treated as owned assets for accounting purposes and their manufacturing emissions are Category 2. Check your lease accounting treatment.
How do we handle Category 2 for assets purchased from related parties?
Intercompany asset transfers within your GHG inventory boundary are excluded — the manufacturing emission was already counted when the asset was originally produced. For assets transferred from entities outside your boundary (e.g. from a divested subsidiary), count the Category 2 emission if the asset is new to your inventory and the original manufacturing emission has not been previously counted.