> 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/3.2.-capital-goods.md).

# 3.2. Capital Goods

## 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, on Module 3.1 Purchased goods and services. 
* 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.