The following did the trick in the application.yml

spring:
  r2dbc:
    url: tbd
    username: tbd
    password: tbd

and then in the Docker file re-define:

services:
  app:
    image: 'docker.io/library/postgresql-r2dbc:0.0.1-SNAPSHOT'
    depends_on:
      db:
        condition: service_healthy
    environment:
      - 'SPRING_R2DBC_URL=r2dbc:postgresql://db:5432/postgres'
      - 'SPRING_R2DBC_USERNAME=postgres'
      - 'SPRING_R2DBC_PASSWORD=secret'