The environmental charity River Action took issue with the ad, which ran for a further two years, and complained to the watchdog that it suggested to consumers that Red Tractor farms will "ensure a high degree of environmental protection".
The charity pointed to a report by the Environment Agency, released in 2020, which looked at how many breaches of environmental law there were on Red Tractor farms in the previous five years. The report concluded that these farms were "not currently an indicator of good environmental performance".
After more than two years of investigation - one of the longest running - the Advertising Standards Authority (ASA) upheld the complaint.
It said that Red Tractor had failed to provide "sufficient evidence" that its farms met "basic" environmental laws and had a good environmental outcome to substantiate the claims in the ad.
It also ruled that as a result the advert was "misleading" and "exaggerated" the benefits of the scheme.
River Action welcomed the decision by the ASA and called on supermarkets to act.
"What this shows is that for their environmental credentials Red Tractor has been misleading the public and their suppliers," said Amy Fairman, head of campaigns at River Action. "So, we're looking for suppliers like supermarkets to really examine and take stock of what is on their shelves."
She added that challenging such adverts was important because of the risk to the environment from agricultural pollution.
In 2022, the Environment Audit Committee concluded that agriculture was one of the most common factors preventing rivers from being in good health - affecting 40% of them. The risks to the environment include from slurry and pesticide runoff.
