NEW METRICS OF INTERNATIONAL BUSINESS DEVELOPMENT AND ARTIFICIAL INTELLECT IN BUILDING MORE RESILIENT PERFORMANCE

Abstract

Environmental, social, and governance aspects of developing international business are closely connected with financial performance and resources aimed at enhancing the business from within. Sustainable business metrics are both quantitative and qualitative, core and expended ones that complete traditional economic gauges. They are systemized into four themes: people, planet, prosperity, and governance, which serve as the methodical framework for accelerating appropriate performance information. Understanding these themes helps international business to improve management, translating into making arrangements for international business market adaptation and developing an internal environment. Being aware of and effectively managing sustainable aspects of business assists in minimizing potential legal and reputation-related risks for businesses, especially those with intricate value chains. Additionally, it stimulates innovation, draws top talent, strengthens customer-centric approaches, increases employee contentment, and secures the necessary permits for local market operations. Artificial intelligence, as one of the main technologies, helps to be sustainable for companies in respect to mitigation, adaptation, resilience, and fundamentals, especially in the theme of the planet. The main advantage of using this technology is the possibility to gather, compete, and process data; fortify the process of planning and enhance the quality of decision-making; optimize processes; and support collaborative ecosystems.

1. Introduction

The current economic development stage outlines the main resilient economic factors due to Covid-19 and international sanctions. This includes creating the dominance of large companies with state participation, along with substantial potential in the industry and research and development sectors. Besides, such factors as significant reserves for the development of production facilities, both in new areas (greenfield) and existing ones (brownfield), could be assessed as appropriate [1]. It means the necessity for economic development to improve the practice of sustainable business development, which is of great interest nowadays. The main reasons are different.

In 2020, the set of 21 core and 34 expended metrics was introduced by the World Economic Forum in its report called “Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation” [2, 3].

In 2023, the International Sustainability Standards Board (ISSB) issued its inaugural standards, IFRS S1 and IFRS S2 [4]. These standards ushered in the next step of sustainability. The step concerned the disclosure of sustainable performance results that are important in capital markets worldwide. Using these documents could help international businesses communicate in a common language and make the sustainability information provided compatible.

This is because international business sustainability affects various stakeholders across society, and the pandemic has accelerated the focus on it for a key reason—the lack of business development instruments aimed for resilient performance. Other reasons are supply chain vulnerability, falling apart from inclusion, the lack of economic growth and economic prosperity for people, and climate change as a fact of life.

Among the sustainable business stakeholders are investors, increasingly putting money into companies that assert strong environmental, social, and governance (ESG) performance that is founded on the implementation of suitable management principles that encompass three primary dimensions: environmental, social, and governance [5]. The investors challenged with investing into companies aim to ensure that the enterprises they invest in possess a sustainable and enduring future. This emphasis on the longevity is closely linked to the risk associated with investment, such as potential physical risk, regulatory risk, or other risks.

But here arises a task. This task includes the necessity to survey sustainable international business performance in a worthwhile manner. It means that the information disclosures about sustainable international business development must be comparable, reliable, and robust. The disclosures must be presented on the base of using standards. And these standards must be easy to apply and really comparable all over the world.

And another more task for a business is the necessity to arrange the appropriate database to be able to assess the sustainability performance. The most applicable worldwide sustainable digital technology is artificial intelligence (AI), which is regarded as one of the essential tools of sustainable management [6, 7].

At the moment AI is viewed from two perspectives: AI for sustainability and sustainability of AI [8]. They are closely connected. The AI for sustainability view has been most often considered in the past few years. It refers to AI’s use in social and ecological areas of importance, such as climate protection or education.

Sustainability of AI is closely connected with its development, implementation, and use in a way that minimizes negative social, ecological, and economic impacts of the applied algorithms [9]. Sustainability of AI is highly important because it helps to achieve social justice.

So that the question of the advantages and disadvantages of AI use in the context of sustainable business performance is on the front burner.

In the context mentioned above, the aim of the article is to analyze stakeholder metrics content and to indicate how companies could make the required database on the foot of using artificial intelligence to assess its sustainable performance, leading to understanding its contribution to build more resilient economics.

So, there are several questions that could help achieve the aim, and they are:

• What is the content of metrics for practical purposes?

• How do these noneconomic metrics correlate with traditional economic gauges?

• What are the main disclosure gauges for international business development in the context of sustainability?

• What metrics could highlight the main linkage between sustainable business development and resilience economics?

• What are the main aspects of AI using in developing the sustainable business?

Exploring the metrics is essential to choosing the appropriate angle for international business to declare its main performance results in connection with its corporate strategy, and putting them into practice should also make a contribution to the building of resilient economies.

The keynote of the research was as the following one.

At the first stage, the main metrics of sustainable international business development were analyzed in connection with the traditional economic business performance results. The content of the stakeholder metrics was disclosed in a special World Economic Forum resource [10].

Then, AI as a new instrument of sustainable business management was highlighted as conducive to understanding the linkage between sustainable and resilient.

2. Results

2.1 Stakeholder metrics of sustainable business

To measure sustainable business means “to disclose,” opening sustainable information on the basis of using standards to make it comparable, reliable, and robust. The conceptual content of sustainable information is captured by relevant stakeholder metrics. That is why “disclosure” is not the same as “metrics”. Sustainable business disclosure will always be individual and unique for every company, while metrics of sustainable business are the standard and universal for use. Disclosure means gathering appropriate sustainability information based on the use of metrics, which companies then report to all stakeholders. Companies are free to choose the appropriate metrics to assess their sustainable performance, and in some case, they could add to the adjusted set of metrics any other ones based on their judgment of materiality disclosed to stakeholders. Sustainable business practice is not only an explanation of environmentally friendly company behavior in terms of measuring metrics in the here and now or for the past period. It is also a process with strategies, targets, milestones, and actions to really get to these targets in the future, which companies disclose in reports.

In this regard, there is a strong interconnectivity between sustainability matters and the financial performance of companies. But the influence acts aimed at providing sustainable business could not be assessed as “good” (in terms of business growth, cost reduction, and etc.) or “bad” (which means cost growth, the need for more competent employees, and etc.). It could be said that sustainable management is one more important direction leading to the accumulation of the intangible assets for companies that could lead to the creation of their goodwill based on stakeholder trust. And trust is one of the main assets of businesses in the modern economic environment that must be managed. In this sense, it could be said that ensuring sustainable business development enables stakeholder trust.

Trust is paramount for every company, regardless of its scale of operation, industry, or mission. Companies need to be trusted by their customers, employees, and investors for various reasons, among them the necessity to hire the best talent and sell their product, possibly within the value chain. Besides, they want to attract the best investors to help them with their growth ambitions and business performance.

Selecting specific metrics for sustainable disclosure by a company depends on the importance of a particular industry or business model.

Simultaneously, in 2020, the World Economic Forum introduced core and expanded metrics covering the milestone areas, divided into four groups. These groups are called “Planet, People, Prosperity, and Governance”.

Each group of metrics includes quantitative and qualitative measures. It results in creating a linkage between ESG performance results and financial and strategic issues. To be successful in sustainability means for businesses the necessity to integrate key sustainable points into strategic development, which also influences corporate financial indicators.

Four groups have two, “People” and “Governance,” directly connected with management and international business development; the other two, “Planet” and “Prosperity,” have the connection implicitly. But it is significant that meeting all groups of metrics could lead to business sustainability. It is highly important for international businesses to disclose their sustainable metrics because it helps to highlight its sustainable growth contribution in different countries, contributing to building on the goodwill.

So, through these metrics, the main advantages of ESG-development are clear: improving quantitative indicators and enhancing business strategic development that lead to its resilience.

The group “People” comprises such issues as “Dignity and equality,” “Discrimination and Harassment,” “Health and well-being,” and “Skills for the future”. These themes are unveiled through different indicators, among them are diversity, inclusion, pay equality, wage level, risk for incidents involving children, forced or compulsory labor, the pay gap, and training provided.

The group titled “Governance” includes five themes. They are “Ethical Behavior,” “Governing Purpose,” “Quality of Governing Body,” “Risk and Opportunity Oversight,” and “Stakeholder Engagement”. The indicators falling under these themes are anti-corruption, protected ethics advice and reporting mechanisms, setting purpose, governance body composition, integrating risk and opportunity into business processes, and material issues impacting stakeholders.

The group called Planet embraces “Air pollution,” “Climate change,” “Fresh water availability,” “Nature loss,” “Resource availability,” “Solid waste,” and “Water pollution”. The indicators of this group depend on the geographical factor of the business environment: greenhouse gas (GHG) emissions, water consumption and withdrawal in water-stressed areas, land use and ecological sensitivity, and resource circularity. It is necessary to add that this group is the most difficult to estimate for business, so new technologies could be most applicable and convenient.

The group called Prosperity contains “Community and social vitality,” “Employment and wealth generation,” “Innovation,” and “Wealth creation and employment” themes. The following indicators subsume this group: community investment, total tax paid, absolute number and rate of employment, total expenses on research and development, and financial investment contribution disclosure. This group of measures is connected with the economic development of the country the business is in, and as a result, the business’s performance makes a contribution to the economic development of the place of presence.

It is necessary to take note that a declaration of international business ESG-performance is solely not a confirmation of creating environmentally friendly business behavior. It also testifies about making contributions to reaching high economic development or enhancing this development in countries of international business presence. That could be assessed on the basis of innovation, quality of life, effective use of resources, and getting lack resources. Through the sustainable measures integrated into business processes, companies could lead their operations not in isolation from but in relation to sustainable aspects, transforming gradually to sustainable business models. And sustainable business models give more opportunities for innovation and resilience in business performance.

2.2 Digital technology for sustainable business performance

There are two main factors that could affect business digitalization. One of them is a lack of workforce that is digitally competent. Another one is the rate of digital economic development of the country realizing the business operations. But at the same time, if a company has the possibility to subdue them, there will be possibility to use new technologies, which are constantly being improved.

The new technologies open the way for business independently of its industry and business view, size, goals, and other factors. These possibilities could be studied from two points of view: strategic management and financial one. In this extent the new digital technologies develop not only the management but also a sustainable business practice, helping to amass the information, which is necessary to create sustainable measures and appropriate indicators.

Using digital technologies creates the possibility to amass the data needed to assess the four mentioned themes, especially for “Planet”.

Business influence on climate change is a pressing topic in this theme. Improving this aspect of business development has the potential to significantly influence the socioeconomic system as worldwide temperatures increase, droughts intensify, and storms grow more severe. As a result, mitigation of climate change, adaptation, and resilience are key modern challenges for the economy, including for business.

A BCG study, done in May 2022, pointed out the great importance of AI in developing sustainable practice, made by environmentally friendly companies and AI leaders.

Modern main international initiatives are the AI for the Planet Alliance, Climate Change AI (CCAI), Global Partnership on AI (GPAI), and the Coalition for Digital Environmental Sustainability (CODES), which gave the formulation the role of AI for sustainable management and business.

As a modern tool for boosting sustainable development, AI can be utilized as a component of several essential functions. Among them are collecting and compiling intricate emissions, climate impact, and future projection datasets. Another function is to enhance the process of planning and decision-making. Another is streamlining processes, facilitating collaborative ecosystems, and creating actions that contribute to a positive impact on climate.

AI works not only for businesses. It also helps different stakeholders be more informed in making decisions in the field of addressing carbon emissions and promoting environmental sustainability on the basis of gathered, processed, and interpreted vast and intricate emissions, climate impact, and beyond datasets.

Additionally, it can be utilized to shift global climate initiatives toward regions that are particularly vulnerable.

The primary existing and future technologies encompass advanced analytics and AI, providing the business with three key advantages.

The first one is mitigation. It means addressing the climate crisis. The measurement of emissions on macroscale and microscale, reduction of emissions and greenhouse gas (GHG) impacts, and elimination of existing emissions from the atmosphere are the base strands.

The second advantage is adaptation and resilience. It entails managing vulnerability and exposure, including constructing infrastructure strategies to mitigate the impact of climate-related hazards.

The third advantage is fundamentals. It encompasses strengthening climate research and economic and social transition modeling. Besides, it includes climate finance and analytics (the prediction of carbon prices), education, nudging, and behavior strategies to encourage climate-friendly consumption.

Adaptation is connected with the high role of power officials and the public as a whole, and it is the base of resilience to emergencies over a long-term period. As a rule, at the current stage, there are three main options associated with AI solutions: hazard forecasting, strategic management of vulnerability, and risk exposure.

One of the main directions for AI application is hazard forecasting. It is realized in the fields of forecasting and projecting climate-related hazards. On the basis of the projection of regionalized events (for instance, scenarios like sea-level rise), AI could play a role in directing investments toward protective infrastructure or facilitating economic reorganization. Over an extended timeframe, varying evaluations of the potential for severe incidents are considered crucial factors in the process of planning infrastructure. As a result, it could help planners devise long-term strategies in order to support sustained economic growth.

Utilizing AI for strategic vulnerability and risk management involves various aspects, such as crisis management (leveraging AI to seamlessly integrate natural language processing with information aggregation from diverse sources), strengthening infrastructure (AI solutions aiding international businesses in project design and risk assessment), as well as protecting populations and preserving biodiversity.

So, AI is an instrument that helps managers meet their needs through its technical capabilities. One of them is collecting, refining, and analyzing data. It could be realized using AI-driven methods. The most common one is the Internet of Things, which generates new insights into consumer actions, preferences, industrial workflows, and supply chain dynamics. Besides, AI helps strengthen the business processes of planning and decision-making. It can be harnessed to analyze intricate challenges when formulating optimal policies. Besides, it is capable of quantifying foundational benchmarks, simulating operational choices, and evaluating potential outcomes.

One more advantage of using AI is the possibility of streamlining operations by optimizing processes and reducing the individual carbon footprint of products within a supply chain.

It is necessary to add that AI supports collaborative ecosystems. It means that AI can be utilized by businesses for faster and more secure vertical data sharing. As a result, using new technology encourages climate-positive behaviors.

At the current stage, many companies in different industries widely use AI to develop international business. For example, in the field of research, AI is used by pharmaceutical companies and agricultural ones.

During COVID-19 vaccine development, the American company Moderna used AI to speed up COVID-19 vaccine development. This digital technology, with its algorithms and robotic automation, helped the company increase the monthly production of a molecule fundamental to the vaccine and mRNA sequence design.

The Alan Turing Institute, the UK’s national center for data science and artificial intelligence, used machine learning to better understand the complex interactions between climate and Arctic sea ice.

The agricultural sector could use AI to advance in aspects of food production, reducing malnutrition, deforestation, biodiversity loss, and others through autonomous machinery to carry out tasks and pest control. Overfertilizing soil could be solved through the use of smart sensing technology that helps to make fertilizer utilization more effective, translating into reduced environmental damage. AI-augmented agriculture via robotics has the advantage of detecting crop diseases at an early stage.

According to IBM, it is necessary to point out five main aspects of using AI in management to develop sustainable businesses. They help gather the information and declare appropriate sustainable performance metrics for stakeholders. They are asset management, inventory management, schedule optimization, anomaly detection, and compute optimization [11].

In the field of asset management, AI solutions help extend the life of assets by prolonging them, reducing waste volume, avoiding landfill growth, collecting asset performance data, and creating machine learning models on the basis of the gathered data. The machine learning models are utilized to predict asset health and the risk of failure.

The aim of AI solutions for inventory management is to reduce the carbon footprint associated with moving and storing stock. They optimize the control of perishable goods during their transportation and storage in refrigerators. Demand forecasting, last-mile delivery, and routing optimization could be interconnected by means of AI.

Schedule optimization on the foot of AI is closely related to the appropriate allocation of employees to job. Using AI helps reduce costs by giving the best solution, for instance, developing asset maintenance more efficiently.

AI solutions for anomaly detection help develop zero-defect production. In this context, AI image and video recognition systems could be utilized to monitor each manufacturing stage and catch any discrepancies very quickly.

Compute optimization with AI means better understanding the needs in computers to optimize the computing and cooling resources used, reduce electricity consumption, and save energy.

Meanwhile, there is some caution and suspicion about the use of AI. So, it is highly important to make sure that the use of AI is transparent, inclusive, and secured by an internationally coordinated, collaborative approach.

Different collaborative initiatives are arising globally at the moment. Among them are such initiatives as AI for the Planet, Climate Change AI, the Global Partnership on Artificial Intelligence, and so on.

3. Conclusions

The modern tools for investigating and assessing sustainable businesses are both quantitative and qualitative metrics; they are systematized into four themes, directly and indirectly connected with international business development. So, the themes help to realize and assess ESG-principles in the management of international businesses: the environment aspect is brought to light through the planet theme, the social aspect through the people and prosperity themes, and the third one through the governance theme.

For all practical purposes, these four themes could be assessed by companies using corresponding metrics. The content of the metrics reflects the essence of sustainable information, specifying all relevant data used to create sustainable disclosures. Metric formalization accelerates sustainable business information not only for external parties but also for the management. Every theme is closely connected with the economic results of business performance and its practice of management.

The aspect named “People” includes embracing diversity within businesses and having a corporate culture in place founded on respect, debonairness, and competency. Additionally, it also comprises the absence of any acts of discrimination, intimidation, or mobbing, as well as safety and labor rights. Developing the “People” aspect within businesses means providing employees with the possibility to train, educate, and skill. Realizing actions concerning the “People” theme leads to different advantages. They are amassing innovative value, helping to lure the best specialists, enhancing customer orientation, providing workers labor satisfaction, increasing employee productivity, and minimizing operational costs. As a result, it provides high business efficiency. It could also translate into obtaining operational permits and strengthening business goodwill by eliminating reputational and legal risks. It gives the company the possibility to amass intangible assets, foster innovation, and provide products based on them.

“Planet” theme means for international business to assemble comprehensive and pertinent contextual information to assess the current business influence on the environment and take actions to be environmentally friendly. It also provides the climate risk control in the case of not realizing a sustainable business model in the way to transfer to an economy characterized by reduced carbon emissions. Moreover, the understanding of the sustainable companies advocating for new conversions of ecosystems could be highlighted through information about the present business model need in total land area utilized in operational and supply chain activities. In this context, sustainability certification standards or sustainable management program availability bear witness to businesses using the land for sustainable value generation over the long term.

“Prosperity” theme embraces the business contribution to amassing governmental revenues through additional tax remitted. It could translate into growing the job places, raising the ability to lure diverse top talents, and giving the resources to innovation to fit the business, society, and economy as a whole for the future challenges.

“Principles of governance” are connected with the control of irrational capital allocation and addressing environmental damage. It is also associated with unethical and illegal conduct and human exploitation. This aspect of sustainable business disclosures should enhance the current ability of business to prevent and rectify ethical concerns. Company declaration of the ability for stakeholders to deliver long-term value is closely connected with its distinct purpose based on understanding ecological and social aspects, integrated into its core business.

On the basis of understanding the internal specifics of business and including environmental considerations, companies could create appropriate nonfinancial reports, not only meeting the interests of all stakeholders but also helping the business maintain its reputation in the international market. Understanding and using stakeholder metrics translate into the additional business possibility of being effective in separate markets and, additionally, leading to resilient economics. As a result, using the appropriate metrics in the business performance information disclosure could help to understand how businesses embraces internal and external sustainable business processes, leading to gaining stakeholder credibility.

The companies’ new instruments, aimed at sustainable business performance, are based on ecological, social, and governance milestones and help develop sustainable business models and sustainable strategies, leading to an incremental international business performance contribution to local economic development in the end.

Innovative sustainable economics for businesses means the liability of storing up workforce diversity and embracing inclusion as a facilitator for nurturing their talent. It is very important for companies because talents are one of the main intangible assets.

To be effective in markets for international business means not only economic results. It also means improvement of existing business model and management. As the advantage, it could lead to goodwill building, effectiveness of business operations, strong corporate culture, and mitigating different risks of international business, aimed at more resilient and stable performance in closely connection with economics as a whole.

Digital technologies, in particular AI, are aimed at supporting management to improve sustainable business performance. AI solutions could be applied in different fields. They include predicting potential hazards and strategically managing vulnerability and exposure to risks. The main result for performance is more resilient development based on collecting and assessing complex datasets on future projections, developing the processes of planning and decision-making, streamlining different business processes, supporting collaborative ecosystems, and encouraging climate-positive behaviors.

The main directions for utilizing AI by different companies all over the world are as so. One of them is the desire to make international business more sustainable. Another one is the aim to improve management by amassing the necessary database to disclose appropriate sustainable metrics. So, there are two ways of addressing AI—AI for sustainability and sustainability of AI.

AI for sustainability is closely connected with using it to improve sustainable development. The sustainability of AI is connected with algorithms and embraces aspects of developing, implementing, and using AI in a way that minimizes the negative social, ecological, and economic impacts of the applied algorithms.

IBM pointed out five aspects of using AI in management that helped to develop international business. They are asset management, inventory management, schedule optimization, anomaly detection, and compute optimization.