It was given for the new government's decision to overturn a ban on offshore oil and gas exploration.
NZ's new government is a coalition of three conservative parties which all campaigned on ending the ban put in place by Jacinda Ardern's Labour-led government in 2018.
Climate Action Network (CAN) spokesman Muhammed Saidykhan said "New Zealand had been saying all the right things".
"But with a new government in the driver's seat, they seem to have swerved off course and are undermining the indigenous people-led struggle by announcing plans to reopen Aotearoa waters to oil and gas exploration," he said.
"Aotearoa New Zealand ... has a responsibility to make sure decisions are in the best interests of their neighbours and should not ignore the calls from those at immediate risk of sea level rise to line the pockets of fossil fuel companies.
"Expect criticism. We have no time to waste in securing a liveable future."
NZ has been criticised from other quarters for the move, with Germany's climate ambassador and Palau's president also condemning the "tragic" switch.
"New Zealand as a Pacific island and a member of the forum should take a leadership role and should be active in doing all they can to transition away from fossil fuels," Surangel Whipps Jr told Radio NZ.
"That's what they should be working on."
NZ is also yet to join more than 100 countries, including Australia, to sign onto a pact aiming to triple renewable energy use by 2030.
Climate Change Minister Simon Watts, who will travel to Dubai for the climate talks this week, has been contacted for comment.
Mr Watts will attend COP28 alongside former climate minister James Shaw, the Greens co-leader, with the new government honouring a long-running convention to send leaders from both sides of politics to the conference.
It is not the first time that NZ has been dishonoured by the award.
Last year, Jacinda Ardern's Labour government was given the same award for "seeking to delay any agreement to establish a loss and damage finance facility".
In 2021, it was named runner-up for equivocating on upping its climate pledges, or Nationally Determined Contributions (NDCs), and arguing against caps on climate offsets.
