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Despite the last-minute breakthrough agreement at the UNFCCC COP27 to provide funding for climate-related loss and damage for vulnerable countries, distribution mechanisms and funding sources remain up for debate. With rapid-onset climate impacts intensifying and slow-onset impacts further manifesting, loss and damage from climate change is already occurring. Thus, quick, effective, and transparent distribution of upcoming funds is necessary. Currently, only a tiny fraction of existing sources of climate finance reaches affected communities, commonly marked by high levels of poverty and low levels of adaptive capacity. Similarly, donor-based global humanitarian aid and development systems are buckling under the weight of increasing demand. As increasing climate impacts threaten to reverse development gains of the last decades, climate-sensitive social protection has received increasing attention for its potential to address climate impacts and to strengthen the adaptive capacity and resilience of climate-vulnerable populations. This review article explores the prospects of channelling Loss and Damage funding through existing national social protection systems and highlights how this approach can efficiently contribute to safeguarding development gains, including previously overlooked aspects such as noneconomic loss and damage (NELD), while also dismantling soft adaptation barriers and thus fostering climate resilience in the long term. Although we identify barriers, including gaps in coverage of social protection systems both between and within countries, we argue that channelling some L&D funding through social protection systems aligns with core human rights and climate justice agendas, as well as the principle of Common But Differentiated Responsibilities and Respective Capabilities.