diff --git a/policy-agent/src/test/java/org/oransc/policyagent/tasks/EnvironmentProcessorTest.java b/policy-agent/src/test/java/org/oransc/policyagent/tasks/EnvironmentProcessorTest.java
new file mode 100644
index 0000000..c22629b
--- /dev/null
+++ b/policy-agent/src/test/java/org/oransc/policyagent/tasks/EnvironmentProcessorTest.java
@@ -0,0 +1,145 @@
+/*-
+ * ========================LICENSE_START=================================
+ * O-RAN-SC
+ * %%
+ * Copyright (C) 2020 Nordix Foundation
+ * %%
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *      http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ * ========================LICENSE_END===================================
+ */
+
+package org.oransc.policyagent.tasks;
+
+import static org.assertj.core.api.Assertions.assertThat;
+
+import ch.qos.logback.classic.Level;
+import ch.qos.logback.classic.spi.ILoggingEvent;
+import ch.qos.logback.core.read.ListAppender;
+
+import java.util.Properties;
+
+import org.junit.jupiter.api.Test;
+import org.onap.dcaegen2.services.sdk.rest.services.cbs.client.model.EnvProperties;
+import org.onap.dcaegen2.services.sdk.rest.services.cbs.client.model.ImmutableEnvProperties;
+import org.oransc.policyagent.exceptions.EnvironmentLoaderException;
+import org.oransc.policyagent.utils.LoggingUtils;
+import reactor.test.StepVerifier;
+
+public class EnvironmentProcessorTest {
+    private static final String CONSUL_HOST = "CONSUL_HOST";
+    private static final String CONSUL_HOST_VALUE = "consulHost";
+
+    private static final String CONFIG_BINDING_SERVICE = "CONFIG_BINDING_SERVICE";
+    private static final String CONFIG_BINDING_SERVICE_VALUE = "configBindingService";
+
+    private static final String HOSTNAME = "HOSTNAME";
+    private static final String HOSTNAME_VALUE = "hostname";
+
+    @Test
+    public void allPropertiesAvailableWithHostname_thenAllPropertiesAreReturnedWithGivenConsulPort() {
+        Properties systemEnvironment = new Properties();
+        String consulPort = "8080";
+        systemEnvironment.put(CONSUL_HOST, CONSUL_HOST_VALUE);
+        systemEnvironment.put("CONSUL_PORT", consulPort);
+        systemEnvironment.put(CONFIG_BINDING_SERVICE, CONFIG_BINDING_SERVICE_VALUE);
+        systemEnvironment.put(HOSTNAME, HOSTNAME_VALUE);
+
+        EnvProperties expectedEnvProperties = ImmutableEnvProperties.builder() //
+            .consulHost(CONSUL_HOST_VALUE) //
+            .consulPort(Integer.valueOf(consulPort)) //
+            .cbsName(CONFIG_BINDING_SERVICE_VALUE) //
+            .appName(HOSTNAME_VALUE) //
+            .build();
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectNext(expectedEnvProperties).expectComplete();
+    }
+
+    @Test
+    public void consulHostMissing_thenExceptionReturned() {
+        Properties systemEnvironment = new Properties();
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectErrorMatches(throwable -> throwable instanceof EnvironmentLoaderException
+                && throwable.getMessage().equals("$CONSUL_HOST environment has not been defined"))
+            .verify();
+    }
+
+    @Test
+    public void withAllPropertiesExceptConsulPort_thenAllPropertiesAreReturnedWithDefaultConsulPortAndWarning() {
+        Properties systemEnvironment = new Properties();
+        systemEnvironment.put(CONSUL_HOST, CONSUL_HOST_VALUE);
+        systemEnvironment.put(CONFIG_BINDING_SERVICE, CONFIG_BINDING_SERVICE_VALUE);
+        systemEnvironment.put(HOSTNAME, HOSTNAME_VALUE);
+
+        String defaultConsulPort = "8500";
+        EnvProperties expectedEnvProperties = ImmutableEnvProperties.builder() //
+            .consulHost(CONSUL_HOST_VALUE) //
+            .consulPort(Integer.valueOf(defaultConsulPort)) //
+            .cbsName(CONFIG_BINDING_SERVICE_VALUE) //
+            .appName(HOSTNAME_VALUE) //
+            .build();
+
+        final ListAppender<ILoggingEvent> logAppender = LoggingUtils.getLogListAppender(EnvironmentProcessor.class);
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectNext(expectedEnvProperties).expectComplete();
+
+        assertThat(logAppender.list.get(0).getLevel()).isEqualTo(Level.WARN);
+        assertThat(logAppender.list.toString()
+            .contains("$CONSUL_PORT variable will be set to default port " + defaultConsulPort)).isTrue();
+    }
+
+    @Test
+    public void configBindingServiceMissing_thenExceptionReturned() {
+        Properties systemEnvironment = new Properties();
+        systemEnvironment.put(CONSUL_HOST, CONSUL_HOST_VALUE);
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectErrorMatches(throwable -> throwable instanceof EnvironmentLoaderException
+                && throwable.getMessage().equals("$CONFIG_BINDING_SERVICE environment has not been defined"))
+            .verify();
+    }
+
+    @Test
+    public void allPropertiesAvailableWithServiceName_thenAllPropertiesAreReturned() {
+        Properties systemEnvironment = new Properties();
+        String consulPort = "8080";
+        systemEnvironment.put(CONSUL_HOST, CONSUL_HOST_VALUE);
+        systemEnvironment.put("CONSUL_PORT", consulPort);
+        systemEnvironment.put(CONFIG_BINDING_SERVICE, CONFIG_BINDING_SERVICE_VALUE);
+        systemEnvironment.put("SERVICE_NAME", HOSTNAME_VALUE);
+
+        EnvProperties expectedEnvProperties = ImmutableEnvProperties.builder() //
+            .consulHost(CONSUL_HOST_VALUE) //
+            .consulPort(Integer.valueOf(consulPort)) //
+            .cbsName(CONFIG_BINDING_SERVICE_VALUE) //
+            .appName(HOSTNAME_VALUE) //
+            .build();
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectNext(expectedEnvProperties).expectComplete();
+    }
+
+    @Test
+    public void serviceNameAndHostnameMissing_thenExceptionIsReturned() {
+        Properties systemEnvironment = new Properties();
+        systemEnvironment.put(CONSUL_HOST, CONSUL_HOST_VALUE);
+        systemEnvironment.put(CONFIG_BINDING_SERVICE, CONFIG_BINDING_SERVICE_VALUE);
+
+        StepVerifier.create(EnvironmentProcessor.readEnvironmentVariables(systemEnvironment))
+            .expectErrorMatches(throwable -> throwable instanceof EnvironmentLoaderException && throwable.getMessage()
+                .equals("Neither $HOSTNAME/$SERVICE_NAME have not been defined as system environment"))
+            .verify();
+    }
+}