Longer term investments Eight billion people, and beyond

Calculating the number of people on the planet is not an easy task, nor one that can be carried out with precision. But the United Nations estimates that the world population reached 8 billion this week—just 12 years or so after crossing the 7 billion threshold. The UN said this “milestone in human development” was due in part to improvements in public health, nutrition, hygiene, and medicine.

But officials also warned of the challenges created by a growing population, from strains on resources to environmental degradation. With the UN projecting the global population to reach 9.7 billion by 2050, such challenges are likely to persist in the decades ahead.

Yet humans are adept at finding ways to do more with less, and developing solutions that improve productivity and efficiency. We think the drive to do so is likely to create a broad range of investment opportunities over the long term, many of which are aligned with the UN's Sustainable Development Goals:

Feeding a growing population, at a time when food insecurity is increasing, will require investments throughout the food supply chain. In our view, this should favor stocks linked to improving agricultural yields alongside reducing environmental damage, saving water, and adapting to climate change, as businesses are increasingly rewarded for boosting production efficiency and reducing overall emissions. If the current consumption of land-intensive foods such as animal proteins persists, food production would need to increase by around 50–60%, according to forecasts by the UN Food and Agricultural Organization. Efforts to improve efficiencies across the food supply chain will drive opportunities in areas including smart agriculture, alternative protein, and logistics.

Investments in energy efficiency and greentech solutions are likely to increase, spurred by the need to meet the energy requirements of a growing and urbanizing population at a time of heightened supply uncertainty. Effective energy efficiency solutions enable end-users to reduce power demand at source; this cuts CO₂ emissions and saves resources. We see scope for energy efficiency investments in buildings, industrial processes, IT, and transportation. We also expect companies linked to renewable energy solutions to see increased demand in the years ahead—supporting our “Clean air and carbon reduction” long-term investment theme.

Momentum toward a circular economy will accelerate, in our view. Current levels of consumption would require the environmental resources of 2.3 earth-sized planets, according to the World Business Council for Sustainable Development—and a growing population increases the scale of the challenge as goods are bought, consumed, and discarded. However, a combination of tighter regulations, shifting consumer preferences, resource scarcity, and technological innovations are accelerating the development of a circular economy, which uses fewer virgin resources and extends product lives through repair and reuse. As this transition continues, we see investment opportunities ranging from waste management (e.g., recycling) to the plastics value chain.

So, we expect population growth to underpin several of our longer-term investment themes. In this article, we have focused on those that aim to improve resource efficiency. However, areas such as education, healthcare, and infrastructure development—especially in emerging markets—also have a key role to play in meeting the needs of a growing population. To read more on our longer-term investment themes, please click here.

Main contributors: Alexander Stiehler, Michelle Laliberte, Alison Parums