NISM-Series-XV: Research Analyst · Company Analysis - Business and Governance

ESG and Shareholding Pattern Analysis for Research Analysts

Updated 11 October 2026 · Fact-checked

ESG analysis checks how a company handles environmental, social and governance risks. In India, listed companies report this through the BRSR. Shareholding pattern analysis reads who owns the company: promoters, institutions and the public. You solve questions by identifying the category, the disclosure involved and what the data signals about risk.

Understand ESG and Shareholding Pattern Analysis

ESG stands for environmental, social and governance. Environmental factors cover energy use, emissions, water, waste and climate risk. Social factors cover employees, safety, supply chain, customers and communities. Governance covers the board, management control, shareholder rights, disclosure and ethics.

Why does a research analyst care? These factors can change a company's costs, legal risk, reputation and long-term earnings. A poor safety record can lead to shutdowns. Weak governance can lead to value being taken out of the company. So ESG is an input to risk assessment and, indirectly, to valuation.

In India, SEBI requires top listed companies to file the Business Responsibility and Sustainability Report (BRSR) as part of the annual report. It replaced the earlier Business Responsibility Report. It is built around the nine principles of the National Guidelines on Responsible Business Conduct. It has general disclosures, management and process disclosures, and principle-wise performance disclosures. The performance disclosures are split into Essential indicators, which are mandatory, and Leadership indicators, which are voluntary. Your workbook gives the exact list of companies covered and any assurance rules, so check it.

The shareholding pattern shows who owns the company. The main groups are promoter and promoter group and public. Public includes institutions (mutual funds, foreign portfolio investors, insurance companies, banks) and non-institutions (retail and others). Listed companies disclose it to exchanges every quarter.

Read it for trends, not just levels. A rising promoter stake can show confidence. A falling stake can be a warning. Pledged shares, where promoters have given shares as security for loans, raise risk because a price fall can force lenders to sell. Rising institutional holding can show professional interest. Always compare several quarters.

Key formulas to remember

Promoter holding: Promoter holding % = Shares held by promoter and promoter group ÷ Total shares outstanding × 100; Public holding % = 100 − promoter holding %, when only these two categories exist.
Pledge ratio: Pledged % = Pledged promoter shares ÷ Total promoter shares × 100; Check the base. It is usually promoter shares, not total shares. Read the question wording.
ESG components: ESG = Environmental + Social + Governance; Know which factor each example belongs to. Board independence is G, emissions is E, worker safety is S.
BRSR indicators: Essential = mandatory; Leadership = voluntary; Both sit under the principle-wise performance disclosures.
Change in holding: Change = Holding % this quarter − Holding % last quarter; Quote in percentage points, not percent.

How to solve ESG and Shareholding Pattern Analysis questions

Use this method for any ESG, BRSR or shareholding question.

1Identify the topic: ESG classification, BRSR structure, or shareholding data.
2For ESG, label each factor as E, S or G before looking at the options.
3For BRSR, recall the structure: general disclosures, management and process, principle-wise performance, and Essential versus Leadership.
4For shareholding, note the base. Is it total shares, promoter shares or public shares?
5Compute any percentage or change in percentage points carefully.
6Interpret the result: pledging is a risk, a rising stake can signal confidence, and a falling stake needs a reason.
7Eliminate options that overstate, such as claiming a signal is always good or always bad.

Quickest way: Label, base, signal

When to use it: Use it on MCQs where you have under a minute per question.

Label: put the item under E, S or G, or under the BRSR section.
Base: confirm what the percentage is calculated on.
Signal: decide whether it is a risk or comfort, and reject absolute words like always or never.

Common mistakes in ESG and Shareholding Pattern Analysis

Putting board independence or related party dealings under social factors.
Both involve people, so they feel social.
Fix: Anything about board, control, disclosure, audit or shareholder rights is governance. Social is about employees, customers and communities.
Treating Leadership indicators in BRSR as mandatory.
The word leadership sounds important.
Fix: Essential indicators are mandatory. Leadership indicators are voluntary.
Calculating the pledge ratio on total shares instead of promoter shares.
Students use total shares for every holding percentage.
Fix: Use the base the question states. Pledged promoter shares are normally measured against promoter holding.
Reading a high promoter holding as always good.
It is taught as a sign of commitment.
Fix: High holding also means concentrated control and low free float. Judge it with governance quality and pledging.
Confusing the BRSR with the older Business Responsibility Report.
Both names look similar.
Fix: BRSR is the newer, more detailed format that replaced the BRR, with measurable indicators.
Stating change in holding as a percent change instead of percentage points.
Both use the percent sign.
Fix: A move from 40% to 36% is a fall of 4 percentage points.

Worked examples

Example 1

A company has 50,00,000 shares outstanding. The promoter group holds 30,00,000 shares and has pledged 6,00,000 of them. Find the promoter holding and the pledge ratio on promoter shares.

Show the solution

Promoter holding = 30,00,000 ÷ 50,00,000 × 100 = 60%.
Pledge ratio = 6,00,000 ÷ 30,00,000 × 100 = 20%.
So 20% of the promoter stake is pledged, which is 12% of total shares.

Answer: Promoter holding is 60% and 20% of promoter shares are pledged.

Example 2

Which of the following is a governance factor rather than an environmental or social factor? (A) Water consumption per unit of output (B) Lost-time injury rate of workers (C) Proportion of independent directors on the board (D) Carbon emissions intensity

Show the solution

Water use is an environmental factor, so A is out.
Worker injury rate is a social factor, so B is out.
Carbon emissions are environmental, so D is out.
Board composition relates to how the company is controlled, so it is governance.

Answer: (C) Proportion of independent directors on the board.

Exam tips

Practise sorting examples into E, S and G quickly. Many questions are only this.
Memorise the BRSR structure and the Essential versus Leadership split.
Check the base of every percentage in a shareholding question.
Watch for absolute words in options. Shareholding signals depend on context.
Negative marking applies, so skip a question only if you cannot eliminate at least two options.

Practice questions from Company Analysis - Business and Governance

ESG and Shareholding Pattern Analysis: frequently asked questions

What is BRSR?

BRSR is the Business Responsibility and Sustainability Report that SEBI requires specified top listed companies to include in their annual report. It reports on environmental, social and governance performance using the nine principles of responsible business conduct.

What are the main categories in a shareholding pattern?

The main groups are promoter and promoter group, and public. Public is split into institutions such as mutual funds and foreign portfolio investors, and non-institutions such as retail investors.

Why do analysts worry about pledged promoter shares?

If the share price falls, lenders may ask for more security or sell the pledged shares. That can push the price down further and reduce promoter control.

Is ESG analysis part of fundamental analysis?

Yes. Analysts use ESG information to judge risks and the quality of management that may affect long-term earnings and valuation. It supports, and does not replace, financial analysis.