Defense Contractors: Lockheed Martin, Raytheon, BAE , When War Becomes Permissible

Defense contractors are one of the genuinely contested categories in Shariah investing. Unlike gambling or alcohol (where there's no scholarly debate), weapons manufacturing occupies a space where classical Islamic law actually permits the activity in principle but contemporary Muslim investors often have ethical concerns that go beyond pure Shariah technicalities.

This article will walk through the case for permissibility, the case against, how the major screening methodologies treat defense stocks, and what the specific screening looks like for Lockheed Martin, RTX (Raytheon), Northrop Grumman, General Dynamics, BAE Systems, and others.

Fair warning: this is one of the articles where thoughtful Muslims will legitimately disagree. I'll try to represent multiple views.

The classical position: weapons manufacture is permissible

Islamic law has always permitted the manufacture and sale of weapons in principle. The Prophet himself owned swords, armor, and shields. The early Muslim community manufactured weapons. Classical jurists discussed the sale of weapons as a normal trade category.

The one qualifier: you can't sell weapons to people who will use them to commit unjust aggression. Imam Malik and other classical jurists discussed the permissibility of selling weapons with a qualifier about the buyer's intent. You can sell a sword to someone who will use it defensively. You shouldn't sell it to someone you know is about to rob a caravan.

That distinction (which depends on the end-user) is where most of the contemporary debate lives. Modern defense contractors don't sell weapons to individuals. They sell to governments. The question becomes: which governments, and for what purposes?

The AAOIFI and mainstream screening position

AAOIFI Shariah Standard No. 21 and most major index providers (Dow Jones Islamic Market, S&P Shariah, FTSE Islamic, MSCI Islamic) do not include defense as a sector-level exclusion. Weapons manufacturing is treated as a permissible business activity in principle, subject to the standard financial ratio screens.

Some methodologies apply additional scrutiny to companies involved in the manufacture of weapons specifically prohibited under international humanitarian law (chemical weapons, biological weapons, cluster munitions, landmines), but these are relatively narrow categories and most major defense primes are not pure-play producers of those specific categories.

Shaykh Nizam Yaquby, Shaykh Mohammad Taqi Usmani, and several other major scholars on Shariah supervisory boards have treated defense contractors as permissible in principle, subject to the usual financial ratio tests.

The ethical case against defense investment

Some Muslim investors go beyond the Shariah technical screening and apply an ethical filter. The reasoning goes: even if weapons manufacturing is technically permissible, the specific customers of Western defense contractors include governments and militaries that have been involved in conflicts that have caused mass civilian casualties in Muslim-majority countries. Iraq, Afghanistan, Yemen, Gaza, Libya, Syria, and others have all seen Western weapons used in operations that killed Muslim civilians.

From this perspective, buying stock in Lockheed Martin (which has supplied weapons used in the Yemen conflict), RTX (missiles used in various operations), or BAE (weapons supplied to multiple parties in multiple conflicts) is viewed as profiting from the killing of Muslims.

This is not a Shariah ruling in the technical sense. It's a moral position that some Muslims take based on the principle of avoiding harm (la darar), applied to indirect facilitation.

Scholars like Shaykh Haitham Al Haddad and others have voiced concerns about defense investments on ethical grounds even while acknowledging that strict Shariah screening might still permit them.

The practical effect: screening methodologies generally allow defense contractors. Individual Muslim investors sometimes add a personal exclusion on top of the methodology.

Lockheed Martin (NYSE: LMT)

Core business: Military aircraft (F-35, F-16, F-22, C-130), missiles, space systems, rotary aircraft (Sikorsky helicopters).

Sector screen: Passes under AAOIFI-style methodology. Some ethically-focused Muslim investors exclude.

Non-permissible income: The small non-operational revenue streams (interest income on cash, a few other items) are typically under 2 percent. Passes.

Debt-to-market-cap: Long-term debt around $19 billion against a market cap of ~$130 billion. Ratio about 15 percent. Passes.

Cash and interest-bearing securities: Lockheed holds around $2.5 billion in cash. Ratio very low. Passes.

Accounts receivable: Passes.

Result: Lockheed Martin passes all standard Shariah screens. Ethical filters are a separate decision.

RTX Corporation (NYSE: RTX, formerly Raytheon)

After the Raytheon-United Technologies merger in 2020, RTX became a diversified aerospace and defense company with three segments: Collins Aerospace (commercial and military aerospace systems), Pratt & Whitney (commercial and military aircraft engines), and Raytheon (missiles, radar, defense electronics).

Core business: Roughly half defense, half commercial aerospace. All permissible in principle.

Non-permissible income: Under 2 percent. Passes.

Debt-to-market-cap: Long-term debt around $43 billion against a market cap of ~$170 billion. Ratio about 25 percent. Passes.

Cash ratio: Passes.

Result: RTX passes standard Shariah screens.

Worth noting: Pratt & Whitney had a multi-billion-dollar engine recall issue in 2023 to 2024 that weighed on RTX's financials, but the debt ratio remained within thresholds.

Northrop Grumman (NYSE: NOC)

Core business: Military aircraft (B-21 Raider, E-2 Hawkeye), missile systems, space systems, cyber. Northrop is a relatively pure defense play.

Sector screen: Passes.

Debt-to-market-cap: Long-term debt around $15 billion against a market cap of ~$72 billion. Ratio about 21 percent. Passes.

Result: Passes Shariah screens.

General Dynamics (NYSE: GD)

General Dynamics has two very different halves: the defense business (M1 Abrams tanks, nuclear submarines through Electric Boat, combat vehicles) and Gulfstream, the private jet manufacturer.

Core business: Defense and aerospace. Permissible.

Sector screen: Passes.

Debt-to-market-cap: Long-term debt around $9 billion against a market cap of ~$70 billion. Ratio ~13 percent. Passes.

Result: Passes.

L3Harris Technologies (NYSE: LHX)

Communications and electronic warfare systems. Diversified defense electronics. Passes sector and ratios as of early 2026.

BAE Systems (LSE: BA.L)

BAE is the UK-based global defense giant with operations in the US, UK, Saudi Arabia, Australia, and elsewhere. Military aircraft (Eurofighter, F-35 partner), submarines, land vehicles, naval systems, electronics.

Core business: Defense, with a small commercial aerospace and cyber component. Permissible under mainstream methodology.

Sector screen: Passes AAOIFI-style methodology.

Debt-to-market-cap: Long-term debt around £4 billion against a market cap of ~£42 billion. Ratio ~9 percent. Passes easily.

Result: Passes standard screens. Worth noting that BAE has a significant ongoing business with Saudi Arabia, which creates ethical concerns for some Muslim investors depending on their view of Gulf conflicts.

Boeing (NYSE: BA)

Boeing is a strange case. It's a commercial aerospace company (737, 787, 777) with a defense and space division. The commercial side has dominated revenue historically, though defense is a large segment.

Core business: Commercial aerospace (permissible), defense (permissible under mainstream methodology).

Sector screen: Passes.

Debt-to-market-cap: This is Boeing's real problem. After 737 MAX issues, pandemic losses, and 787 manufacturing problems, Boeing took on enormous debt. Long-term debt around $50 billion against a market cap of ~$115 billion. Ratio about 43 percent. Fails the 30 percent AAOIFI debt threshold.

Result: Boeing currently fails Shariah screens on the debt ratio, not on the sector.

Airbus (PA: AIR)

Airbus is Europe's main commercial and defense aerospace manufacturer. Helicopters, commercial aircraft, defense and space.

Core business: Passes sector.

Debt-to-market-cap: Airbus has historically had a stronger balance sheet than Boeing. Debt ratio typically under 20 percent. Passes.

Result: Airbus typically passes Shariah screens.

Specific weapons categories that get rejected

Even screening methodologies that allow defense broadly will often exclude companies specifically involved in:

• Nuclear weapons manufacturing
• Cluster munitions
• Landmines
• Chemical or biological weapons
• Controversial weapons under international humanitarian law

Most major defense primes are not pure-play producers of these specific categories, but some have historical or ongoing involvement. Investors applying stricter ethical filters sometimes check specific weapon program participation.

Defense ETFs

ITA (iShares US Aerospace & Defense ETF), XAR (SPDR S&P Aerospace & Defense ETF), and PPA (Invesco Aerospace & Defense ETF) are the main defense sector ETFs. These hold baskets of defense names and generally track the major primes.

These ETFs are not specifically Shariah-compliant. If you want defense exposure through a halal ETF, you'd need to check whether any of the existing Shariah ETFs (SPUS, HLAL, etc.) have meaningful defense sector weighting, which varies.

Israeli defense companies

This is where the ethical question becomes acute for many Muslim investors. Companies like Elbit Systems (ESLT) and Israel Aerospace Industries (privately held but with traded subsidiaries) have been deeply involved in the ongoing conflicts with Gaza and other Palestinian territories. These companies technically pass mainstream AAOIFI-style screens but are actively boycotted by a significant portion of the Muslim investment community on ethical and political grounds.

This isn't a technical Shariah screening issue. It's an applied ethics question that individual investors resolve differently.

Small-arms and civilian firearm manufacturers

Smith & Wesson (SWBI), Sturm Ruger (RGR), Vista Outdoor (VSTO) and similar firearm manufacturers sell primarily to civilian markets rather than military. Sector screens generally allow them under the same logic as defense contractors (weapons manufacture is permissible in principle), though some methodologies treat civilian small-arms with more scrutiny. Financial ratios vary.

The bottom line

Mainstream Shariah screening methodologies treat defense contractors as permissible, subject to the standard financial ratio tests. Lockheed Martin, RTX, Northrop Grumman, General Dynamics, L3Harris, and BAE Systems all pass under AAOIFI-style screening. Boeing currently fails on the debt ratio.

The separate ethical question (whether it's morally acceptable to profit from weapons that may be used against Muslim populations) is one that individual investors resolve based on their own values. It's not a technical screening question. Scholars are not uniform on this. Some apply additional ethical exclusions. Others stick with the technical screening result.

If you want to invest in defense with a clean conscience, one practical approach is to focus on companies whose primary products are defensive in nature (radar, electronic warfare, cybersecurity, command and control) rather than offensive weapons systems. That distinction is imperfect but gives some investors a framework they're comfortable with.

Run any defense ticker through FaithScreener to see the current ratios. The sector test will usually pass. The ethical decision is separate.