The Center for Global Development said that the country had been ranked below Denmark and Sweden, which were respectively ranked in first and second place, because of its trade tariffs and oil industry.
Norway pumps more fossil fuels per person than any of the other 27 richest countries tanked in the 2013 Commitment to Development Index, and has the second-highest tariffs after South Korea.
Norway has fallen to third place among the 27 countries, from the second position behind Denmark in 2012.
Heikki Eidsvold Holmås, international development secretary in the former Labour-led coalition, agreed that the environmental impact of Norway's oil industry was at odds with the country's ethical principles.
"It's the elephant in the room as far as Norway's climate policy goes," he said. "We grow rich while we destroy the living environment for the world's poor."
But he argued that the report had failed to give Norway credit for reducing import tariffs for some of the world's poorest nations.
"I think the report is a bit oversimplified. Many of the poorest countries already have zero tariffs on agricultural products to Norway," he said.
Story continues below…
Norway was ranked number one on both its openness to immigrants and its contribution to international peace-keeping operations, and featured in the top ten countries in terms of aid, finance, and technology.
Norway gives the most foreign aid as a percentage of its income out of all the world's 27 richest countries.