As the global population steams past 7 billion, the need to feed, clothe, and light homes without destroying the planet becomes more complicated…but ultimately quite profitable, notes John Bishop of Investing Daily.

The global population crossed the 7 billion mark this week, a symbolic event that was celebrated in maternity wards across the globe, but brings up certain sustainability questions as well.

The world’s population reached 6 billion only 13 years ago, and is expected to reach 9 billion as early as 2043, according to the United Nations Population Fund (UNFPA). As the UNFPA’s executive director, Dr. Babatunde Osotimehin, wrote on The Huffington Post, nearly all of the population growth is occurring in developing nations.

In fact, 80% of the world’s countries have fertility rates that will keep their populations stable or in decline over the coming decades. For example, Germany’s population is forecast to decline by more than 15% between 2011 and 2050. Ethiopia’s population will double over the same period.

Investing Daily spoke with John Segrich, portfolio manager of Gabelli SRI Green (SRIGX), a mutual fund that invests in companies that address in a socially-responsible way the challenges posed by a swelling global population. Segrich highlighted three industries that lie at the intersection between population and profits.

Investing Daily: Please explain Gabelli SRI Green Fund’s mandate as it relates to population growth.

John Segrich: We look at population growth and try to understand what pressures that growth will place on resources—both the constraints on resources and the consumption of resources. We then try to identify which companies have a product, service, or solution that’s designed to solve that problem.

We define resources very broadly: energy, earth, air, water, agriculture, infrastructure, as well as the underlying metals and materials being consumed. However, Gabelli SRI Green Fund doesn’t invest in oil or drilling companies because they’re too environmentally unfriendly.

Nevertheless, we take a practical approach when it comes to investing in energy. We recognize that the world can’t shift from coal to renewable energy overnight.

Investing Daily: The global population reached 7 billion this week. What’s the significance of this milestone?

John Segrich: There’s nothing to be scared of. But we must be more thoughtful about how we’re using and consuming resources. Much of the growth we’ve seen in the last 50 years globally has been driven by consumption. But if the emerging markets consume at the same rate as the developed world does, we’re going to run out of resources quickly.

As markets such as Brazil, Russia, India, and China grow, they’re also becoming more affluent. They need more energy, more food, and different types of food. That will create a number of challenges globally.

Investing Daily: What are some of the industries your fund has identified?

John Segrich: The energy industry, for starters. The real question is how we transition to cleaner energy. I want to emphasize the word “cleaner” and not “clean,” because it will take some time to transition to clean energy.

You can’t switch off all the world’s coal and nuclear plants overnight. Even if you were able to build enough solar and wind power to do so, these renewable energies aren’t dependable.

After the events in Fukushima [the Japanese nuclear plant crippled by a March earthquake], the world’s energy focus is shifting away from nuclear power. The real beneficiary of this transition will be natural gas.

We’re very focused on liquefied natural gas (LNG). It’s been a major theme for the fund since the beginning of this year, and the investment case is beginning to play out.

We especially like the LNG tanker space, companies with ships that transport LNG from the US to Asia. There are a finite number of tankers in the world, and it takes a long time to build a tanker. Even if you placed an order for a tanker today, it would take three years to receive a tanker and probably cost you $300 million to $400 million.

LNG shipping rates have begun to move up aggressively, and we think those rates will continue to rise. The market’s in constraint, there’s huge demand, Japan needs to import more gas and the US needs to become an exporter of gas. LNG production and exports will rise, which will put upward pressure on fleet rates.

Norwegian firm Golar LNG (GLNG) is the largest pure play on LNG tankers. Investors seeking a yield play rather than a growth story should also consider Golar LNG Partners LP (GMLP), a master limited partnership.

Golar LNG owns Golar LNG Partners LP, and will spin assets down to the MLP. We like both companies and own both companies.

Agriculture is another investment theme for Gabelli SRI Green Fund. There are 7 billion people in the world and they must all be fed.

At the beginning of this year, we saw food shortages all over the world. Those shortages turned to political unrest and eventually toppled governments. Was the political unrest entirely related to those food shortages? No. But when people find it difficult to secure food, they become disgruntled.

In the agricultural space, our preferred play is nitrogen producer CF Industries Holdings (CF). Nitrogen is one of three nutrients necessary to replenish nutrients in soil, and it’s used most for corn production.

Corn has some of the world’s lowest levels of unused stocks, and every time corn prices dip you see massive buying from China. Nitrogen is also produced from natural gas, so it ties into the theme of developing a natural-gas based economy in the US.

Infant nutrition is a consumer-oriented play on the growth of a global population. When a population grows and becomes more prosperous, people become more concerned about nutrition.

The concept of infant nutrition is a huge theme in the emerging markets, and Mead Johnson Nutrition (MJN) is the best global play on this theme. The company was spun off from Bristol Myers Squibb (BMY) about two years ago.

Mead Johnson Nutrition also has a good probability of being acquired by a company such as Group Danone (DANOY) or Nestle (NSRGY) .

Read more from Investing Daily here…

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