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Institutional investors today backed the findings of a parliamentary review into Rio Tinto’s legal destruction of ancient rockshelters in Western Australia which they said exposed material investment risk without more industry reform.

The interim review into how global miner Rio legally destroyed the sites in May recommended it pay restitution to the traditional owners, and also that the industry improve how it obtains consent from Aboriginal groups to impact heritage sites on their ancestral lands.

”The report has … highlighted the material risks for investors,” said Australian Council of Superannuation Investors Chief Executive Louise Davidson.

“Long-term investors support structural and cultural changes to the way companies approach their relationships with First Nations stakeholders,” Davidson said in a statement supporting legal reform that would ensure consent was gained in line with global standards.

ACSI represents 37 asset owners and institutional investors which collectively own on average 10% of every ASX200 company.

The focus by investors has been on ensuring continuing, free, prior and informed consent which is defined as a human right under United Nations principles for dealing with First Nations people.

The concept has made uneasy some in the mining industry who see it as potentially undermining certainty for their multi-year, billion dollar investments. The world’s fourth largest iron ore miner Fortescue Metals said during the inquiry that it had continued with one development at “Spear Hill” in 2017 in the face of opposition by Eastern Guruma traditional owners because the group had not earlier raised concerns despite a “detailed consultation process.” “Action must be undertaken by the Western Australian Government and the mining industry to rebalance the relationship between the mining industry and Traditional Owners,” the report found.

While new legislation in Western Australia is being established, expected some time next year, the mining industry must take extra care to ensure proper consent was obtained, the inquiry said.

“Mining companies failing to negotiate fairly and in good faith with traditional owners represents a clear systemic risk to investors,” said chief executive Debby Blakey of HESTA, an investor and health industry superannuation fund.