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In 1991, in the lead up to the adoption of the United Nations Framework Convention on Climate Change (UNFCCC), a representative of the Pacific island state of Vanuatu proposed the inclusion of language calling upon industrialized states to pay for the “loss and damage” that small states were likely to experience due to rising sea levels. The language was rejected and not included in the agreement. Thirty years later, at the 26th Conference of the Parties (COP) to the UNFCCC in Glasgow, Scotland, loss and damage was advanced by a broader coalition of developing countries, and a small group of industrialized countries. Developments in Glasgow signaled the increased salience of the issue on the global agenda. The following year, at the 27th COP, the parties agreed to create a fund for loss and damage. The fund, which has since been established under the aegis of the World Bank, embodies the outcome of a decades-long effort by island states to have the issue placed on the climate agenda. Drawing on interviews with climate negotiators and employing text analysis, this paper traces the evolution of the idea of “loss and damage” to identify the institutional and political economy factors that account for how it gained traction in the context of the UNFCCC negotiations, as well as the centrality of claims to vulnerability as a pretext for claiming support through the fund. It explicates how ‘loss and damage’ has gone from an idea advanced by a group of relatively weak states to a central issue on the climate agenda, resulting in the creation of a mechanism with distributive consequences.