Country Road has announced Australia's first ever fashion industry climate fund and with a focus on First Nations-led innovations.

The Country Road Climate Fund will invest $1.5 million in grant funding to projects which drive climate solutions within the Australian fashion industry over the next three years.

The fund comes out of the recognition how much fashion contributes to the climate crisis.

According to the Climate Council, the fashion industry releases 1.2 billion tones of carbon dioxide a year.

A 2021 report from the World Economic Forum identified fashion and its supply chain as number three of the planet's largest polluter.

The fund will help accelerate projects, programs and initiatives, or products across the Australian fashion industry.

The fund is also targeting Aboriginal and Torres Strait Islander led organisations and programs which are driven to shift the face of fashion and conserving, protecting and restoring natural habitats.

Country Road Climate Fund's project advisor, Yatu Widders-Hunt, is a proud descendant of the Dunghutti and Anaiwan people. She is also the general manager of Indigenous social change agency Cox Inall Ridgeway.

Widders-Hunt said this fund strongly recognises the work already being done by First Nations people in the fashion industry.

"I think it's actually really significant that there's a First Nations pillar of the climate fund," she said.

"We see that in a lot of the practices that First Nations designers are already leading but also in communities where there's particular techniques around harvesting carbon capture.

"The Climate Fund is a great example of where that thinking is influencing a broader initiative and actually making space for and acknowledging and responding to First Nations leadership on issues like climate change mitigation."

The fund is targeted at investing in projects with align with sub-themes of biodiversity, circularity, First Nations and innovation.

Widders-Hunt said they are not only looking forward to seeing First Nations design outcomes, but also environmental practices behind the scenes.

"I think what will be really interesting is how some of the environmental practices are actually influencing supply chains and other things," she said.

"So look at areas where they may be partnerships in agribusiness for instance to ensure that traditional knowledge is embedded in ways of doing things and caring for Country, in sourcing materials sustainably.

"In growing particular materials that are more appropriate for the type of industry we're shaping."

Widders-Hunt said she encourages any First Nations communities, organisations or leaders who are thinking of applying for the fund to contact Cox Inall Ridgeway with questions.

To apply for the Country Road Climate Fund, visit the Country Road website.