Emotional sensibility and corporate performance in supply chain governance: evidence from the UK Modern Slavery Act

Purpose Emotional capital is increasingly recognised as a valuable asset within organisations. As businesses face growing legal obligations to disclose their efforts to combat modern slavery, significant variation exists in how much emotionally sensitive information companies choose to share. The purpose of this study is to examine why some companies disclose emotionally laden content, while others do not. This study introduces the concept of emotional sensibility, defined as companies’ willingness to address sensitive ethical topics in compliance statements. This study examines its relationship with corporate performance through the dual dimensions of moral reliability (social responsibility) and efficacy (corporate governance) providing a deeper understanding of emotional communication in corporate disclosures. Design/methodology/approach The authors analyse 219 company statements written in compliance with the UK Modern Slavery Act (MSA), coding for the inclusion of emotionally sensitive content. Using descriptive statistics and regression analysis, this study examines how two dimensions of corporate performance – moral reliability (social responsibility) and efficacy (corporate governance) – influence companies’ decision to disclose emotionally laden issues in their compliance statements. This study’s typology of corporate performance guides the analysis, allowing us to determine whether companies with better governance or stronger social responsibility records are more likely to address sensitive ethical issues. Findings This study’s analysis reveals that socially responsible companies (HighMR) are more likely to include emotionally sensitive content in their compliance statements, while companies with strong corporate governance (HighE) alone are less likely to do so. Importantly, governance-driven companies only engage in emotionally charged disclosures when they also exhibit high levels of social responsibility. This suggests that moral reliability, rather than efficacy, drives emotional sensibility in compliance statements. These findings challenge previous research suggesting that governance and social responsibility always reinforce each other, highlighting the more complex relationship between corporate performance and emotional communication in anti-modern slavery disclosures. Research limitations/implications This study shows that morally reliable companies – those with strong social responsibility records – are more likely to refer to emotionally charged issues in compliance statements, reflecting greater emotional sensibility. However, contrary to the existing literature, this study finds that corporate governance (efficacy) alone is insufficient to drive such disclosures. This challenges prior research suggesting that governance and social responsibility reinforce one another in driving corporate social responsibility performance. The findings of this study emphasize the need for nuanced analyses of the interaction between governance and social responsibility, particularly regarding emotionally laden topics. Future studies should explore whether specific governance practices influence emotional sensibility in organizational disclosures. Practical implications Efforts to combat modern slavery increasingly focus on transparency legislation, but compliance statements often fall short of expectations. The findings of this study suggest that companies committed to social responsibility are more likely to provide the detailed disclosures that non-governmental organisations and other stakeholders’ demand. By including emotionally charged content, such companies may foster positive emotional responses from the public, enhancing trust and corporate legitimacy. This underscores the strategic value of integrating emotional sensibility into compliance disclosures. Businesses aiming to strengthen stakeholder relationships should recognise the importance of emotional communication, using compliance statements for not just regulatory compliance but also reputation management. Social implications Negative emotions such as anger and outrage often drive protests and boycotts, pressuring companies to improve their social performance. Simultaneously, companies increasingly include emotional narratives in disclosures, including in financial and sustainability reports. This study highlights the importance of emotional communication in compliance statements, suggesting that emotionally aware messaging can mitigate stakeholder concerns. Future research should explore how feedback loops operate between companies and stakeholders, focusing on how companies adjust their disclosures in response to public criticism or reports of human rights violations. Understanding this dynamic could improve how companies manage emotional risks through transparent and thoughtful communication. Originality/value While prior research has examined how emotions influence public policy and government actions, this study extends this focus to the business context, emphasizing how companies communicate emotions through corporate social responsibility disclosures. The authors provide a novel framework linking emotional sensibility to corporate performance distinguishing between moral reliability (social responsibility) and efficacy (corporate governance). By investigating which performance dimensions predict emotionally laden disclosures, the authors offer new insights into how businesses respond to compliance laws while managing stakeholder expectations. The findings enhance theoretical understanding on corporate emotional communication and suggest practical ways to improve compliance statement transparency in an increasingly regulated global market.