Purpose: This study aims to investigate how Living Labs of Van Hall Larenstein UAS perform as sustainability-oriented, transdisciplinary learning environments. It shows how the sustainable development goals (SDGs) can be used as a compass and debates the sustainability impact of applied research. Design/methodology/approach: A case study approach was adopted, including a literature review, scoping visits, online workshops and peer-to-peer inter-vision/learning, using the SDGs as a compass and framework for analysis. Findings: Most Living Labs use a "silo-approach" on the SDGs and are designed from a technological-expert perspective. This results in blind spots, particularly on SDGs related to reducing socio-economic inequality and just institutions. Debating unsustainable systems, cultures and practices is avoided. To contribute to sustainability transitions, universities need to invest in developing transformative capacity. This refers to SDG-transition competences such as collaborative communication, constructively engaging with diversity and conflicts, discussing values, norms and ethics and encouraging reflexivity. Research limitations/implications: Mainly lecturer-researchers were involved in the study. COVID-19 travel restrictions hindered the research at the grassroots level in India and Indonesia. Originality/value: The study revealed the importance of creating Living Labs as safe and brave inter- and transdisciplinary learning environments to practice reflexivity: encouraging students, researchers and stakeholders to look at sustainability issues from plural perspectives and questioning unsustainable practices, which combined lead to changing perceptions, practices and relations and a deeper understanding of how change happens. The SDGs as a compass method supports reflexivity among stakeholders and in redirecting strategies towards a sustainable future.