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Decarbonising food systems without compromising nutrition is a defining challenge of the next decade. Nutritional life cycle assessment (nLCA) offers a path forward by linking environmental indicators to the actual nutritional outcomes delivered to people. This critical narrative/methodological review synthesises current advances, methodological limitations, and future directions in nutritionally informed environmental assessment, with a particular emphasis on protein-rich foods from both animal and plant sources. The use of nutritional functional units and health impact-adjusted metrics are explored. The promises and shortcomings of Tier 1 (single nutrient, e.g. protein mass), Tier 2 (multi-nutrient, e.g. Nutrient Rich Food Index (NRF), nutritional functional units (nFU) and emerging Tier 3 health impact-adjusted metrics, like the Health Nutrient Index (HENI), are discussed. While Tier 1 nFU remain dominant for their simplicity, they often overlook nutrient quality and bioavailability. Tier 2 nFU, such as Nutrient Density Scores, provide improved representations by integrating multiple nutrients, though their utilisation can over-simplify human dietary requirements. Tier 3 indicators, which incorporate health risk-benefit trade-offs and dietary context, offers an integrated approach to capture food impact on human health. Tier 1, 2 and 3 metrics could be improved with up to-date reference data, modelling of nutrient interactions, and expansion of the scope. The need for consequential modelling to capture broader system effects is also explored, such as nutrient cycling losses and land-use dynamics when livestock are reduced. Removing livestock may reduce emissions on paper; however, important nuances such as effects on nutrient cycling and the provision of highly bioavailable iron, zinc, and vitamin B 12 must be carefully considered, particularly if these nutrients cannot be adequately supplied from other sources. Across tiers, several insights recur. Accounting for bioavailability and food matrix effects can reorder rankings. Furthermore, extending the boundaries to include home cooking and grid intensity can raise the footprint of legumes in some settings; and region-specific deficiency patterns mean “global average” solutions may be locally counterproductive. We propose a practical agenda: ensure functional equivalence; adopt energy-balanced, quality-adjusted nFUs and indicators; extend system boundaries to cradle-to-grave (including cooking); integrate dynamic land use and soil carbon; weight nutrients by regional needs; and conduct bioavailability-aware sensitivity analyses. Advancing toward bioavailability-aware, health-relevant, and region-specific nLCA will enable policies and product strategies that are both climate-smart and nutrition-secure, especially for vulnerable populations. • nLCA compares plant- or animal-protein foods but has methodological issues. • nFU choice must match the nutrient gaps and intakes of the target population. • Tier-1 nFUs (e.g. protein-only) are simple yet undervalue nutrient-dense foods. • Tier-2 nFUs differ in nutrient lists, bioavailability data and harmonisation. • Studies omit transport, cooking, storage and health; cradle-to-grave may be needed. • Adding DALYs and diet modelling links nLCA results to health-policy decisions.