Climate action funding is categorized into three main areas: loss and damage, mitigation, and adaptation. Established at COP27, the loss and damage fund aims to assist developing countries facing climate-related crises, like floods and droughts. Mitigation funding focuses on transitioning away from fossil fuels to cleaner energy alternatives, while adaptation investment prepares nations for future climate impacts. Developing nations seek specific allocation targets to ensure sufficient resources are directed to all three areas, particularly loss and damage, which has historically received less funding.