Financial capacity
We sometimes need to consider the financial capacity of regulated companies or persons – their ability to pay for the costs of their environment protection and human health obligations.
We may need to do this when:
- considering whether to require a regulated person or company to provide a financial assurance – a bank guarantee or surety bond to cover the costs of clean up or remediation if pollution or contamination occurs
- determining whether a responsible person or company is a ‘fit and proper person’ when considering a licence application, review or renewal
- determining who is the appropriate person to be made subject to a contaminated land management order
- issuing an environment protection notice
- requiring pollution reduction programs
- undertaking compliance actions.
Financial capacity is relevant when we exercise powers under the:
- Protection of the Environment Operations Act 1997
- Protection from Harmful Radiation Act 1990
- Contaminated Land Management Act 1997
- Plastics Reduction and Circular Economy Act 2021
- Pesticides Act 1999.
Financial risk assessment
To understand a company’s financial capacity we carry out a financial risk assessment.
- Financial assessment procedure (PDF 780KB)
This explains how we do the assessment and the information we use. - Excel-based calculator (XLSX 4.2MB)
This calculates the relevant financial ratios and also gives industry benchmarks and an overall risk rating for the company being assessed. - Worked example for a fictional company (XLSX 4.2MB)
