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Speeches & Transcripts November 6, 2018

Opening Remarks for Panel Discussion on Government Transformation Shaping Economic and Social Change

Good afternoon, ladies and gentlemen. On behalf of the World Bank Group, I would like to thank the organizers for recognizing the role of accounting in facilitating sustainable investment at this year’s World Congress of Accountants.

The World Bank Group has the objective of helping countries achieve the UN Sustainable Development Goals by 2030. As a capital markets issuer, advisor and financier to sovereign and private clients in more than 180 countries, as well as an asset owner through our pension plan, we support the transition of developing countries towards greater sustainability and social inclusion to end extreme poverty and reduce inequality. The share of our activities with climate co-benefits has already surpassed our 2020 target, and we are focused on developing climate-friendly quality infrastructure projects that can help countries enhance their resilience.

Let me talk about four ways we see accountants playing a unique role in developmental policies:

• First, our strategy of mobilizing private sector resources for investment is inherently dependent on building trust—a key element for people to transfer their savings to companies and issuers. Given that this conference takes place in the Asia-Pacific region, let me enlist the example of Vietnam. Transparency provided by strong accounting is fundamental to channel domestic resources to Vietnam’s growing infrastructure needs. However, if applied in the public sector context, it also helps the country observe the debt ceiling and attract foreign investment (much like to many other ASEAN countries in region). And for such mobilization of finance for development to be effective, reporting need to be harmonized, based on solid valuations. This is also why we support the IFRS foundation to help countries with weak financial reporting implement the new standards.

• Second, attracting more private capital to fund the adaptation and mitigation efforts requires integrating new dimensions of value creation into corporate reports. Integrated reporting encourages the practice of finance and business activities focused on strategic fundamentals that help reward long-term benefits from sustainability, rather than short-term gains. It also responds to the need for long-term sustainable investment and the shift in investors’ demand in this direction. This is why the World Bank is working towards adopting this approach in the near future, while supporting public and private companies around the world in also doing so.

• Third, a growing part of companies’ valuation is determined by “intangibles.” This emphasizes the extraordinary role that human capital plays and how it shapes the future in an increasingly service-driven economy. The World Bank has recently published a Human Capital Index, which allows every country to review its relative progress. Also, as we see greater automation of transactions, including through permanent recording by means of blockchain, it becomes obvious that the irreplaceable contribution of accountants will be ever more in their expert judgments on the value and risks of complex structures and businesses.

• Lastly, accountants help ensure transparency in the public sector. The financial and ecological sustainability of governments is a fiduciary responsibility of any democratic system to this and future generations. Accountants have brought new, inclusive approaches to these challenges. At the World Bank, we are working to address the debt sustainability of our clients, especially low-income countries, as well as helping limit the extraction of natural resources or stress on the environment when developing growth strategies. We take the same approach when evaluating the impact of our projects, taking into account multiple dimensions of sustainability, from gender to equity in educational opportunities to reducing climate change.

These are factors for global stability that need to be integrated not only in corporate behavior, but also public policies—and accountants are key actors in this endeavor.

Thank you for your attention. I wish you success throughout the conference.