# HSBC's Islamic fund invested millions in Israeli war firms > The UK's largest Sharia-compliant fund spent over $130m in companies linked to Israel's military, raising questions about Islamic finance ethics. - Title: HSBC's Islamic fund invested millions in Israeli war firms - Summary: The UK's largest Sharia-compliant fund spent over $130m in companies linked to Israel's military, raising questions about Islamic finance ethics. HSBC's… - Keywords: hsbc, islamic finance, israel, gaza, palantir, rtx, weapons manufacturing, sharia-compliant investing, ethical investing, military supply chain, news, world - Source: Al Jazeera — https://aljazeera.com/news/2026/10/19/how-hsbcs-sharia-fund-invested-millions-in-israeli-war-linked-firms?traffic_source=rss - Author: Yashraj Sharma - Read time: 3 min - Topics: hsbc, islamic finance, israel, gaza, palantir, rtx, weapons manufacturing, sharia-compliant investing, ethical investing, military supply chain, news, world ## HSBC's Islamic fund backs Israeli military The UK's biggest Sharia-compliant fund spent more than one hundred thirty million dollars buying shares in companies linked to Israel's military supply chain. ## What the fund claims to do HSBC's Islamic Global Equity Index Fund holds more than eight billion dollars in assets and channels investor savings into global equities screened against Islamic financial principles. ## The fund's stated ethical rules HSBC says it ensures companies have no significant exposure to non-permissible revenue sources such as selling goods or services related to weapons. > company has no significant exposure to non-permissible revenue sources such as selling goods or services related to … weapons ## Expert criticism of HSBC's governance Wahyu Jatmiko, a lecturer at the University of Southampton Business School, said there are strong grounds to criticise HSBC's governance, transparency and handling of investors' ethical expectations. > strong grounds to criticise HSBC's governance, transparency, and handling of investors' ethical expectations ## HSBC's response to concerns HSBC said it takes concerns from clients seriously and will review the matter with independent expert advisors to assess whether the approach still meets investors' expectations. ## Palantir: thirty eight point three million dollars HSBC's fund bought thirty eight point three million dollars worth of shares in Palantir Technologies, a US data analytics company that announced a strategic partnership with Israel's Ministry of Defence in January two thousand twenty… ## Palantir's role in targeting A UN report in June two thousand twenty five identified Palantir as expanding support to the Israeli military, saying there were reasonable grounds to believe it provided automatic predictive policing technology used for automated decision… ## RTX: thirty five point seven million dollars HSBC's fund bought thirty five point seven million dollars worth of shares in RTX, among the world's biggest arms companies, through its Raytheon division which partners with Israeli Rafael Advanced Defense Systems. ## Analog Devices: twenty point three million dollars HSBC invested twenty point three million dollars in Analog Devices, a US semiconductor company that shipped components to Elbit Systems, Israel's biggest privately owned weapons manufacturer, in August, October and November two thousand twenty four. ## Honeywell: eighteen point nine million dollars HSBC's fund bought eighteen point nine million dollars worth of shares in Honeywell International, a US conglomerate that manufactures sensors and guidance devices used in military weapons, including those used in Gaza. ## Rolls-Royce: seventeen point six million dollars HSBC invested seventeen point six million dollars in Rolls-Royce Holdings, the only British company on the list, which manufactures engines for military aircraft and armoured vehicles including Israeli Merkava tanks. ## The screening gap explained Muhammed Ebrahim, a professor of finance at Durham University Business School, said there is a critical gap in screening that assesses declared principal activities, not end use of products or customers. > critical gap ## Why screening misses weapons links A company classified as technology or industrial can pass the business activity screen even if its products end up in weapons systems, allowing indirect military involvement to escape detection. > A company classified as 'technology' or 'industrial' can pass the business activity screen even if its products end up in weapons systems ## Islamic law's broader ethical goals Ebrahim argued that the maqasid of Islamic law, including preservation of life and justice, are not captured by mechanical sector exclusion tests and require supply chain and end use analysis. ## Technical compliance is not ethical fidelity Experts agreed that Islamic finance outsources ethical judgement to screening providers with opaque methodologies and narrow definitions, making technical compliance different from alignment with Islamic law's objectives. > technical compliance is not the same as ethical fidelity ## Key takeaway HSBC's Islamic Global Equity Index Fund invested over $130m in five companies linked to Israel's military, contradicting its stated ethical principles and raising questions about Islamic finance screening.