MELBOURNE, April 8 (Reuters) - UNPRI, a United Nations-backed network that promotes sustainable investment, is reviewing the status of Liberty Mutual as a signatory after receiving a complaint that the U.S. insurer is backing a coal project in Australia that has drawn fire from community groups worried about climate change and pollution.

Action group Save the Dawson lodged a formal complaint, asking UNPRI's board to engage with Liberty Mutual to ensure it withdraws an application to develop the Baralaba South coal mine, 500 kilometres north west of Brisbane in Queensland state, before the end of the month, Paul Stephenson said.

UNPRI's chief executive Fiona Reynolds told Reuters on Thursday that Liberty Mutual's expulsion from the group was one possible conclusion after its review is complete. The insurer formally signed up to UNPRI principles last December.

"That (community group) complaint will now be actioned and will go through our internal process," Reynolds said. "Ultimately a complaint goes to the PRI board and can result in a signatory being delisted."

Liberty Mutual was not immediately available to comment. A spokesman told local media in January that the company recognised the risk of climate change to the planet and was taking action to reduce carbon emissions for the project that would provide hundreds of jobs in a rural area.

The Baralaba South project is expected to produce 5 million tonnes per year of a type of coal that is mostly used in steel-making but that can also be used for power.

Liberty Mutual has faced a backlash from community groups, Aboriginal traditional owners and farmers who are opposed to the development of the mine that they say will worsen climate change and carries a risk of polluting local waterways that lead out to the Great Barrier Reef. (Reporting by Melanie Burton; Editing by Ana Nicolaci da Costa and Kenneth Maxwell)