Steering towards a path of sustainability and resilience in urban environments depends greatly on effective institutions, governance and strategic planning. National governments are increasingly expanding municipal institutions’ mandates by delegating decision making on land-use planning and urban development to local and regional levels. This trend poses municipalities with a complex challenge of setting clear sustainability targets and lifting the institutional barriers inside and outside of their organisation. Based on the business motivation model (BMM), this study presents the results of a thematic analysis identifying barriers and enablers characterizing the institutional capacity base of a municipal organisation in the context of sustainability at an urban level. The results show that the most relevant barrier is the lack of standardisation in sustainability-related working practices, whereas the main institutional enablers relate to flexible working directives that promote the development of innovative projects. This points towards a strong need for a more integrated, dynamic and powerful development approach for sustainable urban areas on a local level.