Capital goods are final products that have an extended life and are used by the company to manufacture a product, provide a service or sell, store and deliver merchandise (e.g. equipment, machinery, buildings, facilities and vehicles).
This category includes:
All upstream (cradle-to-gate) emissions from the production of Capital goods purchased or acquired by the reporting company in the reporting Log.
It excludes:
Emissions from the use of Capital goods by the reporting company (e.g. for fuel use and electricity use)
Transport upstream of tier 1 (direct) supplier to company
Scope of emissions source
How this Category aligns to carbon accounting standards
The GHG Protocol Corporate Standard is an internationally recognized go-to standard for estimating and reporting corporate GHG emissions. GHG emissions are categorised into three 'Scopes'.
Scope 3 emissions are all indirect emissions – not included in scope 2 – that occur in the value chain of the reporting company. In other words, the emissions that are linked to the company’s operations. Activities covered by scope 3 emissions are diverse, but sit in two high level categories:
Upstream emissions are indirect emissions related to purchased or acquired goods and services (all the emissions occurring to the point of receipt by the company: material sourcing and pre-processing)
Downstream emissions are indirect emissions related to sold goods and services (all the emissions occurring after being sold by the reporting company: distribution, storage, use, end-of-life)
The Cozero category, Capital goods, is an upstream source of scope 3 emissions, as defined by the GHG Protocol. All emission calculation methodologies follow the requirements for this scope of emission accounting.
Summary of calculation methods
Here are the different calculation methods available on the Log to calculate scope 3 emissions from Capital Goods. These methods are listed in order of how specific the calculation is. Users should choose the method that is the most appropriate to the data available to them, to their business goals and the significance of the emissions of the category.
Consumption
Emissions are estimated by collecting data on the number of goods bought during the reporting period and multiplying by the relevant emission factor.
Activity data: quantity of goods bought within the reporting period in kg or m2, depending on the capital goods selected. The Log provides conversion of other units.
Emission factor: the Log is providing a default cradle-to-gate emission factor of the capital goods per unit of product (kgCO2e/kg or kgCO2e/m2) but users can also enter supplier-specific emission factors.
How to report emissions on Cozero?
Step 1: Select the Log called Capital goods
Step 2: Select the sub-category you want to report on (e.g. Building and facilities)
Step 3: Choose the type of good you want to report on within the additional levels of details
Step 4: Enter the quantity in kg if you are reporting on Machine and equipment or Automotives and other vehicles or enter the surface in m2 if you are reporting on Building and facilities.
Step 5: (If available, amend the emission factor with your own supplier-specific emission factor)
The Log will automatically calculate the emissions for the quantity or surface of units entered
Direct emission Input
Users can enter the amount of emissions in CO2e directly in the log. They need to make sure of the accuracy of data used in this estimation.
Additional information required
For some categories you will need to answer additional questions in order for the Log to know in which scope to report emissions or if additional calculations are necessary (e.g. upstream emissions of electricity purchased).
Does the capital good entered need to be depreciated over the year of usage in your company?
In financial accounting, Capital Goods are treated as fixed assets and are typically depreciated or amortized over the life of the asset. According to the GHG Protocol, companies should not depreciate the emissions from the production of Capital Goods over time, they should account instead for the total cradle-to-gate emissions of purchased Capital Goods in the year of acquisition. However, some industry guidance or government regulations (such as the French sustainable development agency) are requiring companies to depreciate the emissions of their Capital Goods over the life of the goods. Therefore, users should take a look at what guidance and regulations are requiring them to do.
Answer:
No: Nothing will move
Yes: you will be asked the number of years of usage and emissions will be amortized accordingly.
Where can I find data?
Activity Data:
Internal data systems (e.g. bill of materials)
Purchasing records
Supplier-Specific Emission Factors: It is possible for users to customize the emission factors used to calculate emissions. Most of the time, it is recommended to customize the emission factors if you can obtain emission factors from your suppliers. Supplier-specific data is the most accurate because it relates to the specific activity purchased by the reporting company (e.g. electricity, goods and services, etc.).
Users may send survey to the relevant suppliers requesting the following information:
Product life cycle GHG emissions data (following the GHG Protocol Product Standard)
A description of the methodologies used to quantify the emissions and a description of the data sources used (e.g. emission factors)
Whether the data has been assured or verified and, if so, the type of assurance achieved (preference should be given to verified data)
Ratio of primary and secondary data used to calculate the emission factor
If possible, the data provided by the supplier should be for the same time interval as the company’s inventory.
Note that data quality is an iterative process and should be built over time. Therefore there is no need to have the perfect data right away. For more information on data collection see the article on data sourcing.
FAQ
For additional information on the calculation of scope 3 emissions, users can refer to the GHG Protocol Guidance. Please get in touch with our team if there is a frequent need to make use of this Log emission category and you require additional support in the calculation of emissions.