Civil Society Activism and Corporate Human Rights Disclosure: Experimental Evidence from the U.K. Modern Slavery Act (Revision 3 )

Governments often forgo direct enforcement of non-financial disclosure laws, instead relying on civil society to enforce compliance. The authors present a field experiment testing the effects of civil society activism pressuring firms to comply with the U.K. Modern Slavery Act, which requires corporate disclosure of actions taken to prevent human rights abuses but lacks governmental enforcement. They randomly assigned persistently non-compliant firms to receive different versions of a letter encouraging compliance sent by a leading human rights NGO. Unexpectedly, firms sent a letter were, on average, less likely to comply than a control group that was not sent a letter; no group that was sent a letter increased compliance relative to the control. Including a list of already-compliant peer firms attenuated this negative effect. When the listed peers were drawn from the focal firm’s own geographic region, compliance was statistically indistinguishable from that of the control group. Post hoc analysis suggests that the negative treatment effect was largely confined to firms connected to others: interlocked firms that shared directors with other firms showed a strong and significant negative treatment effect, while isolated firms showed none. The authors discuss implications for research on civil society activism, non-market strategy, and the limits of private politics as a tool for regulatory enforcement in the absence of government sanctions.