It seems that most research money that comes into universities from arms companies started off with the government (i.e. the government paid an arms company to do some research and development (R&D) work). The government needs to shift it’s R&D priorities and put the money into green technologies instead.
Research doesn’t happen in a vacuum. The arms trade devastates lives across the world and students and staff must take responsibility for the social impact of their work. However, as a first step you might choose to focus on campaigning for a right to opt-out of military sponsored projects.
Cutting-edge technology is not unique to the arms industry. Students at your university could be pioneers of new green technologies instead. Universities can have reputations of excellence based on both their cutting-edge research and their ethical principles.