HSBC 'sharia-compliant' fund to exclude arms companies after Israeli-linked revenue exposed

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HSBC 'sharia-compliant' fund to exclude arms companies after Israeli-linked revenue exposed Submitted by Imran Mulla on Wed, 11/11/2026 - 10:11 Move comes after MEE revealed…

The UK’s largest “sharia-compliant” fund is divesting from companies which take more than 5 percent of their revenue from weaponry, after Middle East Eye revealed last month that it purchased more than $100m worth of shares in companies linked to the Israeli military in the first half of this year.

The new change means the British banking giant HSBC’s Islamic Global Equity Index Fund is expected to divest from major companies including RTX, Rolls-Royce, Honeywell International, BAE Systems and Palantir.

The HSBC fund began tracking the S&P Global 1200 Shariah Select Index, a benchmark of companies screened for compliance with Islamic finance principles, in March. The fund is passively managed, which means it mirrors the index's investments.

In early November, the index updated its methodology and is set to implement the changes on 23 November. It will now exclude defence and weapons companies, military contractors and related sectors from the index.

According to the new criteria, the index will exclude companies with a more than 5 percent exposure to military contracting, nuclear weapons, depleted uranium, incendiary weapons, biological weapons and small arms, among other types of weaponry.

According to most screening guidelines, businesses can be deemed “sharia-compliant” if less than 5 percent of their income derives from sources categorised as impermissible.

The index did not previously exclude companies with exposure to most types of weaponry.

MEE reported last month that the fund purchased $35.7m worth of shares in RTX, the world’s second-largest arms company, in the first half of 2026.

Raytheon, an RTX subsidiary, has been described by Campaign Against the Arms Trade (CAAT) as a “significant supplier of missiles and other goods and services to the Israeli military” and as “implicated in Israel’s war on Gaza”.

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