Greenpeace billboards which attacked fertiliser companies and the dairy industry have been ruled as misleading by the Advertising Standards Authority.
The billboards read "Ravensdown and Ballance Pollute Rivers", and in much smaller letters "#TooManyCows" and the Greenpeace logo.
- Opinion: No more cheap shots at dairy farmers over water quality
- Ecologist issues dire warning about NZ's freshwater
Three complainants said the billboards made a false claim and one, Alan Emerson, stated: "The billboards are untrue, gross exaggeration, puffery and deliberate hyperbole that are designed to mislead."
The ASA board ruled the billboards breached rules in the Advertising Standards Code relating to misleading, deceiving or confusing consumers, and rule 2(h), which relates to whether environmental claims are "accurate and able to be substantiated by evidence that reflects scientific and technological developments".
Federated Farmers has welcomed the ruling.
"We believe everyone has the right to express strong views but as the ASA Complaints Board ruling underlines, over-simplification of issues and targeting of two farmer-owned companies is misleading and overly provocative," said environment spokesperson Chris Allen.
"A majority of farmers are working hard and investing significantly to limit run-off, improve water quality and protect biodiversity," said Mr Allen.
He said while there is more work to do in the area of farm management and environmental stewardship, the billboard campaign was not helping with the issue.
"It's not helpful when lobby groups ignore the substantial progress already achieved, vilifies just one section of New Zealand society and fails to acknowledge that our water quality is also hit by urban sewage and stormwater run-off, industrial pollution and the effects of drought."
Mr Allen said he would like to see Greenpeace work with Federated Farmers and help encourage the continued uptake of good farm management practices across the nation.
"In the spirit of co-operation, I'm sure we can organise a group of farmers to help Greenpeace take down the offending billboards."
However Greenpeace has labelled the decision 'disturbing' and is to lodge an appeal.
Campaigner Gen Toop warned if the decision is upheld it could have a "chilling effect" on environmental and social advocacy.
"Civil society must be able to hold individual companies to account, especially when they are responsible for environmental destruction, like Ravensdown and Ballance are," he said.
"It is very disturbing that the ASA has taken a position that companies which pollute the environment are above criticism. Free speech is a vital part of our democratic society."
He said in its decision, the ASA accepted the scientific basis of the ads stating that the increased use of fertiliser has played a part in the intensification of dairying in New Zealand, and there has been increased pollution as a result.
The billboards, which were installed on arterial routes around the country, are the first tactic Greenpeace has rolled out in its new campaign to ban synthetic nitrogen fertiliser.