> For the complete documentation index, see [llms.txt](https://carbonze.gitbook.io/carbonze/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://carbonze.gitbook.io/carbonze/measure/3.1.-purchased-goods-and-services.md).

# 3.1. Purchased Goods and Services

Scope 3, Category 1: Purchased Goods and Services 

This category includes all upstream (i.e., cradle-to-gate) emissions from the production of products purchased or acquired by the reporting company in the reporting year. 

Products include both goods (tangible products) and services (intangible products). 

Companies may use the methods listed below to calculate scope 3 emissions from purchased goods and services. 

### Supplier-specific method

Supplier-specific method – collects product-level cradle-to-gate GHG inventory data from goods or services suppliers. 

### Hybrid method

Hybrid uses a combination of supplier-specific activity data (where available) and secondary data to fill the gaps. This method involves: 

* collecting allocated scope 1 and scope 2 emission data directly from suppliers; 
* using secondary data to calculate upstream emissions wherever supplier-specific data is not available

### Average-data method 

Average-data method – estimates emissions for goods and services by collecting data on the mass (e.g., kilograms or pounds), or other relevant units of goods or services purchased and multiplying by the relevant secondary (e.g., industry average) emission factors (e.g., average emissions per unit of good or service) 

### Spend-based

Spend-based method – estimates emissions for goods and services by collecting data on the economic value of goods and services purchased and multiplying it by relevant secondary (e.g., industry average) emission factors (e.g., average emissions per monetary value of goods). 

Then, we focus on high emissions get supplier specific method and approach end out to be a hybrid method 

## Scope 3, Category 2: Capital Goods - Detailed Overview

**Scope 3, Category 2** under the Greenhouse Gas (GHG) Protocol focuses on the **emissions from the purchase and acquisition of capital goods**. Capital goods are long-term assets that an organization uses in the production of goods or services over a period of years. Examples include buildings, machinery, vehicles, and IT equipment.

### **Calculation Methodology**

In CarbonZE, the emissions from capital goods (Scope 3.2) are calculated using the same module as Scope 3.1 (Purchased Goods and Services). The primary distinction lies in the classification of the goods:

* **Scope 3.1 (Purchased Goods and Services)**: Covers all emissions associated with the production of goods and services purchased by the company that are not classified as capital goods.
* **Scope 3.2 (Capital Goods)**: Specifically refers to emissions from the production of goods that are capitalized by the company (e.g., machinery, buildings).

### **How it Works in CarbonZE:**

* When entering data into the CarbonZE platform, if the purchased item is a capital good, simply select the checkbox indicating that the product is a capital good.
* This action will categorize the purchase under Scope 3.2 (Capital Goods) instead of Scope 3.1 (Purchased Goods and Services).

The calculation involves:

1. **Identifying Capital Goods**: Determine whether the purchased goods qualify as capital goods according to the company’s accounting practices.
2. **Data Entry**: Input the required activity data, including the type of good and the amount purchased.
3. **Emission Factors**: The system applies appropriate emission factors to calculate the GHG emissions associated with the production and acquisition of these capital goods.

### **Importance of Scope 3, Category 2**

Calculating the emissions from capital goods is crucial because these are typically significant, one-time investments that can have a large impact on a company's carbon footprint. By understanding the emissions associated with capital goods, companies can make more informed decisions about their long-term investments and strategies to reduce their overall GHG emissions.

**Example Use Case**: A company purchasing a new fleet of vehicles would categorize this under Scope 3.2. The emissions associated with the production of these vehicles would be calculated, providing the company with insights into how this investment impacts their overall carbon footprint.

By accurately categorizing and calculating emissions from capital goods, companies can better manage and reduce their Scope 3 emissions, contributing to more effective and comprehensive sustainability efforts.