HSBC Sharia-compliant fund to divest from arms companies

HSBC Islamic Global Equity Fund, Britain’s largest Sharia-compliant fund, is set to divest from companies deriving more than 5% of their revenue from weapons after reports that it invested in companies linked to the Israeli military.

The HSBC Islamic Global Equity Index Fund, Britain’s largest Sharia-compliant investment fund, is set to divest from companies deriving more than 5% of their revenue from weapons, Middle East Eye reported.

The move follows an update to the methodology of the S&P Global 1200 Shariah Select index, which the fund passively tracks, early in November. The changes are due to be implemented on November 23. The index will exclude defence companies, military contractors, nuclear weapons, incendiary munitions and others.

Canary Wharf skyscrapers in London (archive)

Major companies to leave the index

The divestment is expected to include major companies such as RTX, Rolls-Royce, Honeywell and BAE Systems, while Palantir is also likely to be excluded because of its military contracts. Middle East Eye reported last month that the fund had purchased more than $100 million worth of shares in companies linked to the Israeli military during the first half of the year.

The index had not previously excluded most companies operating in the weapons sector. Under most Islamic finance standards, a company is considered Sharia-compliant if less than 5% of its income comes from impermissible activities.

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