Background: The Corporate Sustainability Reporting Directive (CSRD) represents a significant shift in how sustainability is governed and communicated within the European Union. While the directive primarily targets the corporate and financial sectors, its reach extends to publicly owned entities, including municipally owned companies (MOBs).

Purpose: This study examines how Swedish municipally owned businesses are responding to the CSRD, focusing on how they interpret, implement, and adapt to the directive’s requirements.

Method: Adopting an inductive research approach, the study used semi-structured interviews with 11 professionals from different municipally owned companies across Sweden. Our interviewees carry different organizational roles such as the sustainability officers, financial managers, sustain-ability strategists, and environmental experts which are responsible for sustainability reporting, financial oversight, and strategic development. Thematic analysis was applied to identify patterns related to organizational capacity, regulatory interpretation, and behavioral responses.

Conclusion: The findings reveal that subject knowledge and role clarity significantly influence how MOBs interpret and apply CSRD requirements. Key barriers include limited internal expertise, reliance on consultants, and technological inefficiencies. While some companies adopt strategic planning and project group models, others engage in symbolic compliance due to resource limitations and policy uncertainty. This study contributes to understanding the readiness and capacity of the public sector in adapting to evolving sustainability regulations and highlights the need for targeted support to bridge knowledge and resource gaps.