The fund is certainly a better solution than paying fines into a general Government of Canada fund, since it is dedicated to environmental protection.
That being said, my preferred solution is that the money be allocated to a project directly related to the offence. It's important to ensure that the money is used to remedy environmental damage, for example, or to support a project that would provide environmental benefits directly related to the commission of the offence.
Ideally, I would advocate remediation, but not all environmental infractions lend themselves to it, as is the case with Volkswagen, because damage must be directly targeted and, above all, repaired. If it isn't possible to repair the environmental damage caused, this is a good option, but it's important to ensure that the funds are directed to a project that is related to the offence.