Atom bank published results from a trial with Experian showing that both Atom and other banks have been over-reporting emissions linked to residential mortgage lending by up to 50%.
The trial used actual meter readings from 1,038 homes and compared them with energy performance certificate (EPC) estimates.
Atom worked with the Department of Mathematical Sciences at Durham University to make sure the sample was representative.
Experian said the difference between meter readings and EPC estimates was large and likely applies to other banks that rely on EPCs to measure CO2.
The study also found that actual carbon emissions from properties in EPC bands A-C, which are classed as most efficient, were not much lower than those in bands D-G.
Atom first thought this was down to personal choices by customers, but experts at University College London’s (UCL) energy institute saw a similar pattern in a larger national dataset.
The UCL team has been looking into the reasons as part of a Government study but has not published yet.
Atom has set a goal to be climate positive by 2035, but said accurate data is needed for the bank and the UK to reach net zero.
Atom called on energy suppliers, the Government and the financial services industry to work together to reform EPCs and improve carbon data accuracy.
The bank said if the data is right, the Government and banks should increase funding for low-carbon electricity and make electricity prices more competitive compared to gas for heating.
Atom, Experian and B4NZ urged energy providers, other banks, the Government and the Bank of England to share their data for a clearer picture of actual emissions and the cost of the transition to net zero.
Atom also said that the Government should speed up planned EPC reforms, including using actual energy data from bills or smart meters instead of estimates.
The bank added that accurate EPCs and better build quality checks are essential for home owners, social housing providers and lenders.
Additionally, the study noted that using real energy data would help low-income households and policy makers see the true cost of running a home and target issues like fuel poverty more effectively.
Atom also pointed out that with more mortgages going to first-time buyers and new builds, there is a chance to align lending with net zero targets.
The bank said integrating meter data into mortgages and loans could make green lending more targeted, but this relies on low-carbon electricity being a competitive option for heating.
Edward Twiddy (pictured), director of ESG at Atom, said: “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.
“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 then how to make that clean energy as affordable as possible.”
Twiddy added: “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.”
Cool added: “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.”
