Far from being cathartic, the past five years of credit crisis and the subsequent slow, painful debt paydown has merely nudged the world economy deeper into the dangers posed by dramatic population growth, aging in rich economies and shortages of natural resources and capital.

Whether you call it the "new normal" or an economic "perma-frost", the resulting consensus is for many more years of sub-par global growth and a vulnerability to shocks that the public at large and the institutions managing their savings are going to have to navigate deftly.

For some, such as bond fund PIMCO's boss Bill Gross, this heralds the death of the "cult of equity" as most firms struggle to boost revenues and profits in such a dour environment.

With bond returns at historical lows and converging rapidly to near zero rates on cash, there's little solace there too for savers even attempting to beat inflation over time. High-dividend blue chips or high-yield corporate bonds have been chased relentlessly over the past couple of years as a hybrid.

Yet some strategists and stock pickers now insist that work needs to intensify on finding innovative "new growth" firms with environmentally sustainable and efficient long-term strategies as well as high scores on governance and regulatory sensitivity.

The rise in recent years of investment models based on "socially responsible investment", SRI, or companies with high ratings on "environmental, social and governance" metrics, ESG, has met with mixed reviews.

But strategists at UK asset manager Schroders warn of dangers in ignoring the scale of population and environmental overload twinned with the demand suppressant of deleveraging and cash hoarding.

Fears over the impact of population growth, which took just 12 years to go from 6 to 7 billion people and is expected to rise another 30 percent by 2050, are not new. But together with rising income aspirations across emerging markets, the impact on food, energy and other natural resources remains daunting.

Amid a long litany of shockers in the report, Schroders cited data estimating that if everyone in the world reached a U.S. level of consumption, we would need three times the ecological capacity of the world.

What's more, statistics compiled for the United Nations by Trucost put the monetary value of environmental damage caused by the top 3000 listed companies at $2.25 trillion, or 3.5 percent of global GDP and a third of their profits.

HYBRIDS, SHAMPOO AND GRAPHENE

Schroders makes three key points for equity investors.

First is that governments will eventually need to regulate to find a sustainable balance and markets will lean that way too. Second, financial systems will then reward companies with efficient processes and resource usage. And third, companies that innovate to solve these problems will be winners.

Among examples, it cites Toyota's leadership in hybrid and electric cars and Unilever's development of water efficiency with dry shampoos and single-rinse laundry products.

On technologies, it pointed to research into graphene - the one-atom thick carbon sheet, 100 time stronger than steel, which can be used to strengthen copper without reducing conductivity and is also being investigated for use in water desalinization and DNA sequencing.

"Any investor with a long-term horizon should be minimizing portfolio risk by ensuring they invest in resilient companies with highly efficient resource usage and the flexibility to adapt quickly to changing conditions," the report said.

So, how prevalent is this sort of investing already and has it been successful to date?

In highlighting future key trends now affecting investment management, HSBC recently included SRI/ESG in its top 10.

The cache of companies in these indices varies from firms simply sensitive to public policy issues or passing governance tests - a hot topic among investors in China right now - to those actively addressing environmental or ethical concerns. But there's little doubt demand is rising.

HSBC data shows SRI assets under management in Europe jumped to over $8 trillion in 2010 from next to nothing in 2005 and is about $3 trillion in the United States.

Crucially, pension funds and others are increasingly demanding investment along SRI/ESG principles, in part because greater transparency on fund holdings is becoming an issue for savers and trustees.

Data from pension fund consultancy Mercer, cited by HSBC, show that such pension fund ratings right now are "dismal", with under 10 percent in the top half of a 1-4 scale.

The bigger question for return-hungry investors is whether these assets actually perform despite their supposed ethical, environmental or political correctness.

To date, the lukewarm reviews reflect the fact that both the MSCI World ESG index and the Dow Jones Sustainability World Index have underperformed global benchmarks by anywhere from two to six percent over the past two years.

But if the mounting economic problems are still way into the future, maybe the potential returns are out there too.

"ESG is a concept that will expand further," HSBC concluded. "This is certainly an area that fund managers will need to spend more time on."

(Editing by Ruth Pitchford)

• A Permanent Economic Emergency