This study explores the capabilities and perceptions of undergraduate business administration students regarding artificial intelligence (AI) and its potential to address challenges in sustainable development. The research aimed to identify suitable pedagogical solutions to enhance students' knowledge and understanding of AI and sustainable development. A workshop was conducted with 22 first-year students, involving introductory lectures, surveys, group discussions, and reflective narratives. Abductive qualitative research was used to analyze the data, revealing new insights into AI literacy in the context of sustainable development. The findings indicated that students had limited knowledge of AI and its applications, and struggled to connect AI with sustainable development. However, in groups where one student had a deeper understanding of the concepts, the group as a whole began to grasp the task and engage with both ethical and practical aspects. The study highlights the importance of AI literacy in higher education, as it enables students to critically evaluate AI's impact on society and make informed decisions. The research also identified challenges in enhancing AI literacy, including students' varying levels of prior knowledge and the need for more in-depth instruction. The study suggests that a pedagogical model based on problem-based learning could be effective in teaching AI literacy. This model encourages students to analyze and evaluate AI's role in sustainable development, and to develop critical thinking skills. The study contributes to the pedagogical approach of integrating AI and sustainable development into higher education curricula. It emphasizes the need for a conceptual framework that supports the development of AI literacy, ensuring that students are equipped to navigate the ethical and practical implications of AI in sustainable development. The study also highlights the importance of future employers in promoting sustainability and the need for students to develop the skills necessary to work in AI-driven environments. Overall, the study underscores the importance of AI literacy in higher education and the need for innovative teaching methods to enhance students' understanding of AI and sustainable development.This study explores the capabilities and perceptions of undergraduate business administration students regarding artificial intelligence (AI) and its potential to address challenges in sustainable development. The research aimed to identify suitable pedagogical solutions to enhance students' knowledge and understanding of AI and sustainable development. A workshop was conducted with 22 first-year students, involving introductory lectures, surveys, group discussions, and reflective narratives. Abductive qualitative research was used to analyze the data, revealing new insights into AI literacy in the context of sustainable development. The findings indicated that students had limited knowledge of AI and its applications, and struggled to connect AI with sustainable development. However, in groups where one student had a deeper understanding of the concepts, the group as a whole began to grasp the task and engage with both ethical and practical aspects. The study highlights the importance of AI literacy in higher education, as it enables students to critically evaluate AI's impact on society and make informed decisions. The research also identified challenges in enhancing AI literacy, including students' varying levels of prior knowledge and the need for more in-depth instruction. The study suggests that a pedagogical model based on problem-based learning could be effective in teaching AI literacy. This model encourages students to analyze and evaluate AI's role in sustainable development, and to develop critical thinking skills. The study contributes to the pedagogical approach of integrating AI and sustainable development into higher education curricula. It emphasizes the need for a conceptual framework that supports the development of AI literacy, ensuring that students are equipped to navigate the ethical and practical implications of AI in sustainable development. The study also highlights the importance of future employers in promoting sustainability and the need for students to develop the skills necessary to work in AI-driven environments. Overall, the study underscores the importance of AI literacy in higher education and the need for innovative teaching methods to enhance students' understanding of AI and sustainable development.