As part of the INSEAI academic cooperation framework, the lecture entitled “Is Informality an Institutional Barrier to Sustainability in Europe? New Causal Evidence” was delivered at Pontificia Universidad Católica Argentina “Santa María de los Buenos Aires.”

The session was presented by Prof. Vasile Alecsandru Strat, Dean of the Bucharest Business School, together with PhD student Ioana Bîrlan, representing the Business Economics Data Science Lab (BEDSL) and IDRL. The presentation introduced recent research examining how informality shapes national ESG performance across Europe, with a particular focus on institutional quality and governance.

The study moves beyond correlation-based ESG analysis and provides quasi-causal evidence on the sustainability costs of the shadow economy across 29 European countries over the period 2000–2023.

Empirically, the analysis combines  ESG scores with Propensity Score Matching (PSM) techniques to compare structurally similar high- and low-informality country contexts. The results indicate that higher levels of informality are associated with a systematic ESG penalty of approximately five points. The governance pillar appears to be the most affected, reflecting weaker enforcement, transparency, and institutional credibility, while environmental and social performance also deteriorate due to spillover effects from institutional weakness.

The findings highlight that informality acts as a structural constraint on sustainability, limiting the effectiveness of environmental, social, and governance-oriented policies, particularly in Southern and Eastern Europe.

The lecture contributed to the broader debate on informality, institutional quality, and sustainable development from a comparative European perspective and reinforced the role of quantitative research within the INSEAI project in advancing causal, policy-relevant evidence at the intersection of ESG measurement and institutional economics.