"The UK has made real progress in addressing the challenge of decarbonising its economy but continuing that momentum will require better data and more targeted action"
- Edward Twiddy - Atom bank
A trial led by Atom bank has revealed that UK banks may be over-reporting emissions from residential mortgage lending by as much as 50%, suggesting the cost and time required to reach net zero could be significantly lower than expected.
The study found that carbon emissions from the most energy-efficient properties are not as low compared with the least efficient properties as predicted by energy performance certificates (EPCs). The findings raise questions about the usefulness of EPCs in eradicating fuel poverty and driving net-zero ambitions, prompting concerns for policymakers.
Industry group B4NZ is working with Atom and other UK banks, urging members to share data and collaborate with policymakers to improve the nation’s approach to net zero. Atom is also calling on the Government to accelerate EPC reforms and focus on providing low-carbon, low-cost power and heat to all households.
Results from the trial
Atom bank collaborated with Experian to compare estimated CO2 emissions based on EPC ratings with actual meter readings from 1,038 homes. Durham University’s Department of Mathematical Sciences helped create a representative sample from Atom’s mortgage book to ensure the results reflected a broad range of properties.
Experian’s analysis showed that Atom is likely overestimating CO2 emissions from residential mortgages by up to 50%. Both organisations believe this discrepancy is likely mirrored across many other banks relying on EPCs for carbon reporting.
The trial also found that actual carbon emissions from homes in EPC bands A-C, typically considered most energy efficient, were not substantially lower than emissions from properties in bands D-G. Initially, Atom attributed this to personal choices of mortgage customers.
Experts at University College London’s (UCL) Energy Institute observed a similar pattern across a larger national dataset. Their research found minimal variation in primary energy use above EPC band C, even after considering family size and thermostat temperature. The UCL team is continuing to investigate the causes as part of a government study on EPC accuracy.
Accelerating the journey to net zero
Atom emphasises that accurate data is essential to meeting its climate-positive target by 2035 and supporting the UK’s broader net-zero ambitions. The bank is urging energy suppliers, the Government, and the financial services sector to collaborate on EPC reform and improve housing-related carbon data. Accurate information could allow banks and policymakers to focus efforts where emissions reductions will have the greatest impact.
Key initiatives highlighted by Atom:
Clarifying lenders’ roles – Atom, Experian, and B4NZ are calling on energy providers, other banks, central Government, and the Bank of England to share data. Greater transparency would help financial institutions target emissions reductions effectively.
Spurring EPC reform – Atom is urging the Government to shift from estimated to actual energy performance data, using smart meters or utility bills. Accurate EPCs and rigorous assessments of build quality are essential for homeowners, social housing providers, and lenders. This would also help low-income households and policymakers better understand energy costs and address fuel poverty.
Shifting to zero-carbon electricity – With many mortgages going to first-time buyers and new builds, lending strategies should align with net-zero goals. Using meter data rather than theoretical carbon estimates could enable targeted green lending, but this requires low-carbon electricity to be a competitive alternative to gas for heating.
“The UK has made real progress in addressing the challenge of decarbonising its economy but continuing that momentum will require better data and more targeted action." explained Edward Twiddy, director of ESG at Atom. "This study reveals that EPC ratings do not reliably reflect actual household emissions, with inaccurate data being a clear hindrance to reaching net zero. If most households are using similar amounts of energy, the focus should be on where that energy comes from and how to make clean energy as affordable as possible.
“The findings of this trial have important implications for green lending, banks’ carbon reporting, and the future use of EPCs in measuring and reducing residential emissions, which has implications for social issues like fuel poverty. Atom is collaborating with organisations such as B4NZ to engage with other banks and policymakers on the reforms needed to drive meaningful change. As the lenders of billions of pounds to households and businesses, banks like Atom have an enormous role to play in meeting the UK’s net zero commitments.”
Scott Harrison, director of strategy & innovation, business information at Experian, said, “Collaborating with Atom on this study has reinforced what we at Experian have long understood — EPCs are not a sufficiently accurate way of measuring household carbon emissions.
“This trial highlights the urgent need to shift from theoretical estimates to real-world data. By leveraging actual primary energy consumption through solutions like Experian Meter Insights, lenders can move beyond unreliable proxies and take meaningful steps toward emissions transparency, credible reporting, and real climate impact.”
Hannah Cool, COO at B4NZ, said, “Atom bank’s decision to publish these findings sets a powerful precedent for the financial sector. Transparency is essential if we are to accelerate the transition to net zero in a cost-effective and fair way. By acknowledging the limitations of EPC-based reporting and embracing more accurate, verifiable data, Atom is demonstrating real leadership. This also opens up the opportunity to move towards consented data sharing in a frictionless way, empowering consumers while enabling lenders to make smarter, greener decisions.
“We encourage other banks to join this initiative. Only through collaboration and open data can we reform outdated methodologies and ensure that sustainable finance is built on evidence, not assumptions.”
