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This article discusses critical gaps in finance for loss and damage and analyses the decision on funding arrangements for loss and damage made at the Sharm el-Sheikh Climate conference (COP27) in 2022. The article first considers the history of various loss and damage finance proposals, including the loss and damage negotiations in the lead-up to COP27. The article then considers in detail the agreed COP27 decision on loss and damage finance. The article concludes with a discussion of future directions in loss and damage finance. In particular, it discusses the importance of future loss and damage finance arrangements for addressing non-economic loss and damage and also offers analysis of the criteria associated with particularly vulnerable’devel-oping countries.