Is The Home Depot Stock Halal?

June 27, 2021

Tayssir Halwani

Table of Contents

How much of The Home Depot’s revenue comes from haram?

Home Depot earns its revenue from the following revenue sources:

Building Materials:

Includes Electrical/Lighting, Lumber, Millwork, and Plumbing.

Décor:

Includes Appliances, Décor/Storage, Flooring, Kitchen and Bath, and Paint.

Hardlines:

Includes Hardware such as fasteners, doorknobs, and safety equipment for building, Indoor and Outdoor Garden products, and Tools.

Home Depot also provides home improvement installation services for its products.

The contributions from each of Home Depot’s revenue segments in their Q1 2021 report were as follows:

Practical Islamic Finance concludes:

None of Home Depot’s revenue comes from anything inherently haram.

Does The Home Depot rely on interest to operate?

For the Trailing Twelve Months as of May 2, 2021 (Numbers in thousands, U.S. Dollars):

Interest Expense: $1,362,000

Total Expenses: $120,567,000

Interest Income: $36,000

Revenue: $141,350,000

Interest Expense / Total Expenses: 1.13%

Interest Income / Revenue: 0.03%

Practical Islamic Finance concludes:

Riba is used but is not relied upon in Home Depot’s operations.

What is The Home Depot’s Environmental, Social, and Governance (ESG) impact?

Environment

Out of Home Depot’s 2,000 stores, 47 stores use rooftop solar.

Home Depot is currently seeking to expand its use of solar energy by installing solar roofs at another 45 of its stores.

Social

Home Depot has a relatively high Glassdoor rating of 3.8 out of 5.0 from over 30,000 current and previous employees compared to a 3.3 average for all other Glassdoor rated companies.

In the first half of 2020, Home Depot spent $1.3 billion on enhanced pay and benefits to ease employee financial challenges related to the Covid-19 pandemic.

Home Depot states they are transitioning from temporary programs initiated during the Covid-19 pandemic to permanent employee compensation enhancements of $1 billion on an annualized basis.

Governance

In December 2020, The Home Depot was fined $20.75 million for lead paint violations.

Deteriorated lead paint mixtures can cause lead poisoning and lead to potential health complications.

The Environmental Protection Agency (EPA) signed a proposed civil consent decree with Home Depot committing the company to establishing a comprehensive set of detailed procedures designed to ensure compliance with the rules and protect customers from lead poisoning.

Practical Islamic Finance concludes:

In aggregate, we find Home Depot to have a net positive ESG impact.