Rio Tinto's legal destruction of ancient Australian rock shelters showed the mining sector was exposed to material investment risks without more reforms, institutional investors said Thursday, backing the findings of a review into the incident.

The interim parliamentary review into how global miner Rio legally destroyed the sites in May recommended it pay restitution to the traditional owners, and 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 is 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.

"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 is obtained, the inquiry said. Iron ore miner Fortescue Metals said during the inquiry it had continued with the development of a rail line around "Spear Hill" in 2017 despite opposition by Eastern Guruma traditional owners because the group had not earlier raised concerns despite a "detailed consultation process."

The rail line was ultimately rerouted after the Western Australian government intervened.

"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.