ESG Investing

Digital Redlining: What Is It and How to Fight It


Though racial and economic inequities have long existed in the US, the Covid-19 pandemic made these inequities much more apparent. One such inequity includes the dramatic disparities in the ability of low-income households to access high-speed internet services. The reasons for this are many, but are often due to digital redlining, a form of discrimination that denies low-income communities access to broadband services. Addressing this inequity in access can pay dividends in nearly every area of ESG, making it essential to understand what the practice is and how to address it.

What Is Digital Redlining?

The term describes a practice where internet service providers fail to deploy, maintain, or upgrade broadband infrastructure serving low-income neighborhoods while concurrently installing faster, state-of-the-art infrastructure in more affluent areas. It is not unlike traditional residential redlining—this practice saw banks creating maps to pinpoint neighborhoods they deemed too risky to extend loans to. Although it was outlawed in the 1960s, residential redlining continued and still influences many ESG issues today, including digital redlining.

The Consequences of Digital Redlining

Broadband providers prioritize neighborhoods that can provide a better return on their investment. As a result, these providers often target wealthier areas, leaving low-income communities—which are often largely populated by people of color—saddled with antiquated internet capabilities. Low-income communities see a lack in access to the same necessary services that other people take for granted, from remote work to virtual classes to telehealth. Thus, communities that are already marginalized end up falling even further behind.

Many advocates also see a form of digital redlining in the practices of Facebook and other social media platforms. This is because these platforms provide personal data to online advertisers, which may withhold information about jobs or housing from marginalized groups, locking them out of access to these opportunities.

Communities that are already marginalized end up falling even further behind.

Efforts to Fight Back

To combat this digital discrimination, the Federal Communications Commission (FCC) asked for public comment in March regarding the next steps the commission should take to address digital redlining.

That was in response to stipulations in the Infrastructure Investment and Jobs Act. Signed into law in November, it includes an allocation of $65 billion aimed at ensuring broadband access for all. It also requires that the FCC develop model policies for local governments and work with state attorney generals to address these inequities toward broadband access.

There is also activity happening at the local level. Local governments in California, for example, have created regional groups to share expertise. In Cleveland, a nonprofit that provides discounted broadband to low-income areas recently partnered with the Cuyahoga Metropolitan Housing Authority to provide broadband services to homes in these neighborhoods. Advocates also suggest that local government agencies form digital equity offices tasked with ensuring that all households have access to high-speed services.

What Investors Can Do

To support efforts to address digital redlining, investors first need to become fully educated on the issue. Then, they can use their influence to urge broadband providers to start building high-speed infrastructure in low-income communities and support efforts to close the digital divide. Through partnerships and blended finance efforts with local government agencies and nonprofits, investors can help ensure that digital discrimination—and the many related ESG issues resulting—becomes an issue of the past.

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