MELBOURNE, Oct 22 (Reuters) - A "responsible investment" group...

MELBOURNE, Oct 22 (Reuters) - A "responsible investment" group on Friday launched a checklist to assess whether mining companies were using best practices to manage Indigenous heritage, which it hopes will lower exposure to financial risk.

The guidelines were launched after a review into the destruction of ancient sites in Australia by miner Rio Tinto (RIO) , and set out red flags that suggest companies may not be taking proper care in their relationships with Indigenous groups.

The inquiry into Rio's destruction last year of 46,000-year-old rock shelters at Juukan Gorge, Western Australia, found this week that Australia's laws did not offer adequate protection for culturally important sites.

Poor management of relationships with Indigenous groups can open companies to financial and operational risks, the Responsible Investment Association of Australasia (RIAA) said.

RIAA includes more than 450 members like superannuation funds, ABDRN, HESTA, and Australian Super. The guidelines have been endorsed by Aboriginal heritage group the First Nations Heritage Protection Alliance.

"When a relationship with Indigenous Peoples is managed poorly and/or cultural heritage management is weak, it can lead to long-term financial risks for companies," the report said.

Compensation, inability to operate on certain land and human capital retention risks count among potential operational hazards.

Red flags that investors should watch out for include a lack of commitment to the principles of consent, and to international human rights standards, specifically UN Declaration of the Rights of Indigenous Peoples (UNDRIP).

They should also watch out for a lack of transparency or acknowledgement of the Indigenous groups their business affects or a reliance on complying only with legal obligations without any further consideration, the group said.