This is using a self-hosted shields.io instance? Already answered in the docu.
Technical questions aside, sadly these load images from an external service and if you put them on the instance side-bar for example, they act like a tracking pixel informing the external server of the IP of every visitor of your site. Besides the privacy implication of this, IANAL this needs consent of the users as by the GDPR, for which there is currently no tooling available in Lemmy.