Ecolabels and novel environmental assessment methods are increasingly being used to evaluate the environmental impacts of food items. Some ecolabels build on life cycle assessment, a standardised method for the environmental impact assessment of products over their entire life cycle. The major challenges of life cycle assessment include its complexity in application and result communication, as well as its data intensity. The aim of this study was to compare the methods behind ecolabels to traditional life cycle assessments for evaluating the environmental impacts of food products. To this end, we (1) categorised ecolabels, (2) identified criteria describing the suitability of existing ecolabels in evaluating the environmental impacts of food labels, (3) identified main challenges of the methods underlying ecolabels, and (4) evaluated the challenges based on the criteria to answer the research question. Among the challenges, we found that merging results obtained by different methods, such as life cycle impact assessment and bonus/malus point systems, to build a composite score can risk double counting. Furthermore, certain agricultural production methods are sometimes assumed to be more environmentally friendly than others without evidence. Environmental labels focusing on one or a few selected aspects of sustainability while ignoring other relevant issues can lead to burden shifting and should be avoided. Based on our findings, we conclude that ecolabels help consumers make more sustainable purchasing decisions and create business cases for companies as an incentive to mitigate impacts, while complex research questions should be addressed based on life cycle assessment.