Deutsche Bank AG has just completed its first green repurchase agreement, marking another foray into a world of increasingly complex ESG instruments. For its green repo, Deutsche transferred securities to London-based asset manager M&G Investments. In return, the German bank received cash to fund its green asset pool, which includes renewable energy projects such as wind and solar power plants, as well as the improvement of energy efficiency in commercial buildings. Deutsche says the transaction is the first of its kind in Europe. BNP Paribas SA has completed a similar deal with Agricultural Bank of China Limited. the hope is that the green repo will encourage more activity so that a new source of green finance can be developed for the industry, as well as a new asset class for investors. The multi-trillion dollar repo market is grappling with how best to adapt to the sustainable finance revolution. There are broadly three different approaches: Using the proceeds from the cash leg of the transaction on green projects Using sustainable collateral, such as green bonds Tying the repo rate to the achievement of sustainability goals The Deutsche-M&G repo uses the first of these. Deutsche says it intends to continue expanding its offering of ESG instruments.