What is the impact of the largest payment network provider?

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This week’s read time: 5 minutes

You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

Visa

This week we dive deep into Visa’s environmental and social impact.

Visa is a global leader in digital payments, facilitating transactions between consumers, businesses, financial institutions, and governments in more than 200 countries.

Some interesting facts:

• The first Visa card transaction (then called BankAmericard) was for a pair of shoes in Fresno, California, in 1958.

• The company’s initial public offering (IPO) in 2008 was the 5th largest in history, raising $17.9 billion.

• VisaNet, the company’s processing network, can handle more than 65,000 transaction messages per second.

COMPANY’S IMPACT

Visa’s overall impact score

Visa has a general impact score of +2.07 (on a scale from -5 to +5). Its impact is spread across 9 UN Sustainable Development Goals (SDGs) and 6 topics, split between positive and negative analyses.

In the socio-economic sphere,

Visa is a global economic enabler, managing $12.3 trillion in total payments and cash volume annually (2023). The company has over 16,000 financial institution clients and more than 70 million merchants accept Visa for online payments. In 2023 only, about 212.6 billion transactions were processed on the company’s network, and there are approximately 4.3 billion Visa cards in circulation globally. From 2020-2023, Visa helped nearly 67 million SMEs with digital activation, enabling them to offer efficient digital selling and payment services and access a broader reach. The company also helped 500 million unbanked/underserved people access digital payment accounts, thus increasing financial inclusion. It employs 28,800 people and provides salaries above the industry average, while it has achieved gender parity in its workforce but not yet in its leadership positions.

However, in 2019, Visa was fined over $4.1 billion in an antitrust case related to interchange fees. The case revolved around allegations that Visa and other providers had engaged in anti-competitive practices by setting and maintaining high interchange fees and by imposing rules that prevented merchants from steering customers toward cheaper payment methods.

Environmentally,

Visa emits 410,300 tonnes of CO₂ equivalent annually (2022), including indirect emissions (equal to over 81,000 homes’ energy use for a year). Annually, the company consumes about 301,000 m³ of water (2022), with 41% of it being in regions with high or extremely high baseline water stress. Although Visa does not manufacture or issue payment cards itself, it still indirectly contributes to plastic pollution through card waste.

_{*The impact score is current as of June 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology at the end of this email.}

ESG VS IMPACT SCORE

What is Visa’s ESG rating?

For comparison, Visa has an A rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

Visa’s impact scores by SDG

Now, back to Visa’s impact score:

Positively (and by weight), the company scores the highest in Decent Work and Economic Growth SDG (+3.13), followed by No Poverty (+3.46), and Partnership for the Goals (+2.39).

Negatively, the company scores the worst in Peace, Justice, and Strong Institutions SDG (-2.53), followed by Clean Water and Sanitation (-2.50), and Climate Action (-2.58).

*the analysis takes into account the weight of the SDGs

PEER GROUP COMPARISON

Visa’s scores by ILG Theme

The Investment Leaders Group (ILG) is a global network of pension funds, insurers, and asset managers, with over $12 trillion under management. They came up with a framework to analyze impact that uses the SDGs as a reference point but with 6 broader themes, 3 of them related to Social (Basic Needs, Decent Work, Well-being), and the 3 others to Environmental (Climate Stability, Healthy Ecosystems, Resource Security). Each analysis is linked to one particular ILG Theme.

Visa scores positively in three out of the five relatable themes. These three themes also carry the most weight in the analysis of the company.

CONCLUSION

Final words

So, Visa’s key social and environmental impact lies in …

its major role as a global economic enabler, providing financial infrastructure that supports billions of transactions and millions of merchants. The company also plays an essential role in financial inclusivity, helping millions of SMEs with digital activation, and hundreds of millions of underserved people access digital payment accounts.

On the flip side, Visa has a negative impact through its considerable GHG emissions, water usage, and indirect plastic waste production. The company was also fined for engaging in anti-competitive practices that harmed millions of customers.

Its positive +2.07 score is a balance of all of these factors and topics.

If you want to delve deeper into Visa’s impact, you can explore it here.

Next week, we will analyze the impact of the world's largest fast-food restaurant chain, McDonald’s. 🍔

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]

METHODOLOGY & SCORES

Crafted from rigorous, fact-based data, our impact scores are powered by Impaakt, a pioneering Swiss-based financial data provider focused on tangible impact over mere intentions. Impaakt scores are powered by stakeholders, ensuring corporates, investors and consumers receive robust, impartial insights to make informed decisions on where to allocate their resources.

Key Features of Our Impact Analysis:

• Comprehensive Research: Our analyses span thousands of companies across various sectors, focusing on the tangible impacts of their business operations, products, processes, and innovations.

• Live, Dynamic Scores: Reflecting the latest in reports and research, our impact scores are continually updated, providing a current view of each company's footprint.

• Zero Tolerance for Greenwashing: By including stakeholders in assessing actions only once the impact occurs, we ensure our assessments reflect the voice of global society, free from greenwashing, and from empty promises and intentions.