Walk into a supermarket and, depending on which country you're in, you can read a label that tells you how fat a product will make you, and how much of that fat is transfat that will kill you even sooner.

That is pretty important from a public health perspective, but what about environmental health? With the US government finally admitting that carbon emissions are affecting the planet's climate, the debate over carbon labelling is heating up (no pun intended).

More than one organisation has latched on to this idea. The UK's Carbon Trust piloted its carbon-labelling programme across the UK this year. Walker's Snacks has signed up to the scheme, as has Innocent Drinks, while Tesco is also labelling some products with the Trust's mark.

Carbon Label California is similarly piloting a labelling scheme on the other side of the pond. The organisation is working with the California Air Resources Board to try and get a voluntary carbon label in place. Co-founder Matthew Newman believes that it could work in concert with a cap and trade initiative, such as the one proposed by Senators Joe Lieberman and John Warner.

"It's also the kind of policy that has the potential to impact international actors, which is something that cap and trade can't do," Newman says. Analysing a product's whole supply chain would stop companies offshoring the dirty part of their operation to countries like China, where domestic environmental regulations would not apply.

That supply chain analysis is the toughest challenge for would-be carbon labellers. "Any item on a store shelf can have hundreds of components and dozens or hundreds of suppliers, so it's a tricky thing," says Adam Stein, co-founder of TerraPass, which buys carbon offsets using money from its customers. Consequently, Stein tries to stay away from supply chain analysis altogether in his business. "It's early days for this stuff. I'm supportive of it, but it'll be a while before it matures."

However, a growing number of companies are committed to making the process simpler and are producing software tools designed to help measure products' carbon footprints across various manufacturing processes. For example, EPS offers a subscription-based service to track carbon emissions at individual plants using process controllers.

But that is only one part of the equation. The Carbon Trust, which has led the field in supply chain assessment methodologies, positions manufacturing processes in a broader set of supply chain considerations which include raw material acquisition, distribution and retail, consumer use and disposal and recycling. It is easy to see how this chain could be turned into a circle, by using recycling to link disposal back to raw materials acquisition.

The Trust has been working with the British Standards Institute and DEFRA on the development of a publicly available specification for the evaluation of carbon emissions from supply chains. PAS 2050 should be published in September or October this year, and will cover all elements of the supply chain.

It is difficult to say just how costly cross-supply chain auditing will be, especially because it is likely to vary between different sectors. Newman's organisation draws a distinction between lifecycle analysis (LCA), which is company specific, and environmental input-output lifecycle analysis (EIO-LCA), which uses a national average. There is a trade-off in expense – LCAs cost more – versus accuracy – EIO-LCAs tell you less about a specific company's p ractices.

Carbon Label California proposes a hybrid of the two, which takes some company-specific information on energy usage, and measures it against the national average.

Given this complexity it is no wonder Newman downplays the idea of a microscopic analysis of competing companies' products. "The accuracy of current measurements makes it difficult to compare similar products. It's hard to assess Coke versus Pepsi based on carbon footprints," he says. "But we can assess, say, strawberries flown from China versus those produced locally."

Consumers might think that such considerations are a no-brainer. If Tesco puts its "by air" label on it, then it must be environmentally evil, right? But if the locally-produced food has been in a heated greenhouse all winter, and the food that was flown in has not, the environmental calculation may result in some counter-intuitive conclusions.

Auditing policies also play a large part in the success of any carbon-labelling initiative. But again there are few standards for ensuring suppliers are handing over accurate carbon emission data, and little sign on the horizon of a robust policing mechanism. "The legislation we're pushing for wouldn't dictate auditing methods," admits Newman. "It would make sense to commission a third party to audit."

The product vendors could finance their own audits, but that could create concerns around trust and legitimacy. "You could also have random auditing and have penalties for those that produced inaccurate samples," Newman says, adding that such an approach would be his personal preference. "That way, if your competitor thinks you're making an inaccurate claim, they can let the auditing agency know."

These practical challenges remain significant, but, according to Newman, it is the political hurdles that currently present the biggest barrier to wider adoption. In the US the administration has been far from sympathetic to regulating carbon, but there is hope in the form of individual state governments. California, for example, is very aware of climate change issues, and has carbon-labelling legislation on the agenda.

There are also questions over which carbon-labelling standard will win the widest approval. Carbon Label California faces competition when it comes to labelling standards. The Carbon Fund has the CarbonFree label, and is launching the second version of its product certification protocol next month. CarbonCounted has yet another one, which is compatible with either PAS 2050 or another, international greenhouse gas evaluation standard, ISO 14025:2006. Perhaps we need a labelling system for carbon labels? We're sure there'll be an EU standard for that coming along any time now.

In the meantime, Newman hopes that California's standard will become Lord of the Labels. "We're promoting this to prevent the adoption of multiple standards," he says, adding that he doesn't want customers to be misled by companies using their own labels that aren't properly audited. "There's nothing to stop companies making carbon footprint claims, or claiming that it's locally grown, or claiming that solar power was used in the production of a product," he warns.

As more businesses get involved in carbon labelling, it is hoped that the policy will snowball with those products not carrying the label increasingly ostracised by environmentally-conscious customers. Consequently, pressure on firms to curb emissions across their supply chain will grow as they realise there is a competitive advantage to be gained from attaining the lowest carbon footprint in a given product category.

From a policy makers' perspective, developing a labelling standard is a challenging task, but there is little doubt that once established it would prove a relatively low maintenance means of embedding sustainability practices in many firms' supply chains.