The NCC's Greening Supermarkets study judged eight supermarket chains on a range of factors, including CO2 emissions, waste and sustainable sourcing, and rated Marks & Spencer "good" overall for its green practices.
Sainsbury's and Waitrose improved on their "showing potential" rating last year to join M&S at the top of the poll.
All of the eight supermarkets in the study improved their overall rating from last year, but Tesco and Asda's rating of "showing potential" indicates that they could be doing more to satisfy the NCC's environmental trading credentials.
Co-op, Morrisons and Somerfield were credited as having "room for improvement", to become the two most improved brands after being rated "poor" last year, while few of the supermarkets in the study excelled in a particular discipline.
In the NCC's report cards for each supermarket, Marks & Spencer was praised for its sustainable fishing, receiving an "excellent" rating for using well-stocked fisheries. Meanwhile, Sainsbury's scored strongly for waste reduction to receive a "good" rating.
Elsewhere, Tesco was rated strongly for using energy-saving light bulbs and sustainable farming.
Waitrose was also singled out for its sustainable fishing and sustainable farming practices, which were each rated as excellent, but was told it could be doing more to increase the amount of in-season UK-sourced produce it sold.
NCC said all of the supermarkets polled could be doing more to reduce plastic bag usage, although Sainsbury's and Tesco were noted for taking the initiative in giving consumers incentives for bringing back used bags. Co-op and M&S were marked lower for not supplying plastic bag recycling facilities.
The study noted that companies were becoming more aware of airfreight and CO2 emissions, but only Tesco had created a specific target for reducing air transport for overseas produce.
Meanwhile, all of the supermarkets said they aimed to sell only 100% British produce in certain categories, but the report found this was sometimes inconsistent with what it found.
The report said: "There have been improvements from all the retailers in this year's survey, with no 'E' ratings in 2007 compared with two in 2006, and with a general shift up the ratings.
"However, none of the retailers scored top marks across all the indicators, showing that there are still some areas where they can improve."
The full report is available to read .