Sustainability in FinTech: metrics we use in dashboarding
VI company is a domain specialist in building applications and websites for a wide range of clients in the financial sector. In recent years, an important part of the requirements of our customers in the field of visualizations and dashboards has been about sustainability. But what is sustainability actually? What metrics are used? What are specifics of sustainability dashboards? And how do we assist our customers in their journey?
Environment, Social and Governance
The point with sustainability is that the term sustainability in and of itself has little specificity. What one means by sustainability is quite context dependent and mostly subject to one’s belief system. In the financial industry, the drive to overcome this ambiguity has led to the widespread adoption of so-called ESG scores. These scores are used to score companies on metrics that are related to Environmental, Social and Governance factors. Environmental factors include among others concerns about carbon emissions and biodiversity, social factors are about human rights and diversity and inclusion, and governance factors concern corporate governance issues like executive compensation and employee well-being.*MSCI ESG scores (Source: MSCI)*
Sustainable Development Goals
Another pillar of sustainable investing is the incorporation of the United Nations Sustainable Development Goals (SDGs). These are 17 goals that were adopted by the UN in 2015 in a call for action to make the planet a better place by 2030. They include targets and goals like no poverty (no. 1) and zero hunger (no. 2), affordable and clean energy (no. 7) and reduced inequality (no. 10). In contrast to ESG score, SDGs are in principle for everyone, so the scope is not only for companies but also individuals and governments. For investors, SDGs are complementary to ESG-score: one could say that the latter focus on the how whereas the prior targets the what. So, for example a weapons or tobacco company might have a great ESG score but the impact on society of selling weapons or tobacco is detrimental to the UN goals to make the world a better place.*United Nation Sustainable Development Goals (Source: UN)*
“The Sustainable Development Goals are the blueprint to achieve a better and more sustainable future for all.”
In sustainability, one other environmental measure deserves special attention: the carbon footprint. The carbon footprint is a measure of the amount of greenhouse gasses individuals, companies or countries emit. Although it is not easy to measure carbon footprints, it is an attempt to objectively measure the negative impact of greenhouse gasses on the climate. By reporting on carbon footprints, companies or asset managers show their investors and other stakeholders how far they are in transitioning away from fossil fuels and towards a carbon neutral world.
For companies the carbon footprints are split in three levels or ‘scopes’. Scope 1 measures the direct emissions like emissions generated by their buildings or company vehicles. Scope 2 measures the indirect emissions like emissions generated by their electricity provider or other purchased goods. Scope 3 measures all indirect emissions that are generated in the company’s value chain, so for example emissions generated using the use of the sold products. Mostly, attempts to reduce or limit the carbon footprints, are focused on scope 1 and 2, whereas scope 3 is the hardest to obtain and to impact. One thing is certain: if the world wants to transition away from burning fossil fuels, all scopes need to be addressed and a lot of global regulation tries to achieve exactly that.*Carbon footprints categorized by level. (Source: Planet.earth)*
At VI Company, we apply certain principles in the design process of any new application or dashboard. These principles apply to the design of sustainability-related dashboards and visualizations as well. Given the complexity around sustainability metrics, one of the most important principles is especially relevant: "Meet the needs of the users". It comes down to focus on what an end-user wants to achieve. For example, when we display ESG statistics, we don't want to force the end-user to go through a lot of hoops. For example, in building an ESG dashboard for one of our clients, LifeSight, we made sure users could instantly see a summary of relevant data. From there, they could click on a topic to discover in more detail what they are interested in.*Entry point of the ESG dashboard, with the quick summary on the right. (Source: Lifesight)*
'Less is more' is another design principle that is in the LifeSight ESG dashboard. Obviously, ‘less’ is not always possible, as there are instances where users want to see large amounts of raw data. However, if possible, we want to avoid inundating the end-user with too much information. We guarantee that users see the data that are genuinely relevant to them by using vibrant images, bold text, and not dumping raw data everywhere we can.