Purpose: Higher education institutions (HEIs) are crucial in sustainable development. To this end, they must infuse sustainability into all their endeavors. This study aims to delve into the unique vertically integrated project (VIP), a project-based learning approach and its impact on students' skills and the surrounding community. Design/methodology/approach: The research design was collaborative, reflecting the spirit of the VIP. Step 1 involved an action research approach, where students and instructors worked closely with municipal representatives to identify challenges and devise solutions for local economic development. In Step 2, students' voices were heard through a survey. Step 3 encompassed presentations in scientific and nonscientific events, capturing the community's perception as a valuable feedback loop. Findings: The authors identified the most effective policies implemented by municipalities that excelled in indices related to the business environment. VIP enhanced students' soft skills, including critical thinking, teamwork and community spirit. The outcomes of the VIP were effective in identifying public policies aimed at social transformation. Practical implications: This study's findings offer significant insights for HEI managers, guiding them in adopting interdisciplinary pedagogical practices. These practices, in turn, foster sustainable development within both internal and external communities. Furthermore, the empirical study's focus on improving local community governance can potentially enhance the local business environment. Originality/value: Literature emphasizing the social dimension of sustainability in HEIs is scarce, particularly those practices related to teaching, research and extension linked to projects aimed at community sustainability. This study introduces interdisciplinary practices encouraging student involvement in addressing tangible issues and searching for solutions to community problems.