LONDON, April 30 (Reuters) - Norway's sovereign wealth

fund plans to back a shareholder proposal demanding PepsiCo ( PEP )

conduct a biodiversity risk assessment to gauge how

vulnerable the soft drink and snacks giant's operations are to

biodiversity loss.

The decision by PepsiCo's ( PEP ) seventh-largest shareholder adds

to signs that biodiversity-related risks to businesses are

rising up the agenda for investors.

It also challenges the PepsiCo ( PEP ) board's recommendation to

shareholders that they reject the proposal at the annual general

meeting on Wednesday.

"The board should account for material sustainability risks

facing the company, and the broader environmental and social

consequences of its operations and products," the fund, which

pools revenues from the Norwegian state's oil and gas

production, said ahead of the meeting.

PepsiCo's ( PEP ) board said a biodiversity assessment is

unnecessary and not in the best interests of PepsiCo ( PEP ) or its

shareholders, pointing to the company's existing reporting and

initiatives to support sustainability.

The $242 billion maker of Pepsi soda, Doritos and Lay's

crisps and Quaker oats has a goal of spreading regenerative

farming practices - meant to prioritise soil health and protect

biodiversity - across 7 million acres by 2030.

The proposal by Green Century Capital Management says that

while PepsiCo ( PEP ) has taken "commendable" initiatives on

sustainability, it may be exposed to unnecessary risks if it

doesn't fully assess its dependency on natural systems and seek

to limit impacts on the business.

"PepsiCo ( PEP ) must assess and mitigate activities leading to

biodiversity loss in its supply chain or risk becoming

uninvestable," the shareholder said.

German asset manager Allianz Global Investors also last week

said it would back the biodiversity proposal.

In its published voting intentions, Norway's sovereign

wealth fund also said it would vote against the compensation of

PepsiCo's ( PEP ) named executive officers.

The fund has voiced concerns about what it sees as excessive

CEO pay at U.S. companies, and voted against PepsiCo ( PEP ) executive

compensation last year too.

The fund will also vote against the reelection of PepsiCo ( PEP )

chairman and CEO Ramon Laguarta, as it believes the roles of

chairperson and CEO should be separated.

(Reporting by Helen Reid

Editing by Ros Russell)