That’s one reason, but also just the impracticality of jailing everyone who was a shareholder at the time. Diffuse responsibility is also a very strong insulator.
A 401k that market weights is not the same as an executive actively lying.
I know this because BP coined the term "personal carbon footprint" in order to tell well-meaning liberals like me that we were personally responsible for global warming, and not the oil companies spending to make sure the only practical mode of transportation was individual vehicles burning petrochemicals for energy. Or, prior to that, the oil companies giving Greenpeace money to go heckle nuclear energy and set back the development of clean energy by decades[0].
Likewise, when we do eventually Nuremberg these oil fucks, they are going to throw this exact same argument back at us. They are going to argue that they were just responding to shareholder demand, that fiduciary duty in a for-profit corporation mandates CEOs and board members commit crimes against humanity if it would maximize profits. It doesn't, of course. It'd be insane to argue that corporations are legally obligated to break the law if it makes them a buck. Which, of course, means that there's already a historical record of Nazi-collaborating business owners who used the shareholder value argument specifically to get out of a hanging at Nuremberg. So let's not use that argument. The moral and legal culpability must be concentrated primarily in the people who had the power and made the decisions at the time, and not laundered through the mechanism of the market to an accountability sink.
Besides, are you really going to put everyone in America with a 401k on trial? That would actually be a really good pretext to putting America under martial law and stripping Americans of their rights[1].
[0] To be clear, PV solar is so cheap now it makes any other form of energy look expensive and useless - nuclear included. The point is specifically that we emitted 40 more years of carbon than we needed to because of this.
[1] Which, to be clear, is already happening, has been happening for decades, and is always happening unless you make continuous efforts to revalidate your rights through democratic means outside of merely voting.
If the law was "you need to hire your own private investigators and external auditors to find deception in all the companies you invest in", then yes, shareholder liability would be reasonable.
Shareholder liability is the only way to prevent companies from tobacco/oil style abuse of externalities. You can execute the execs and it will make no difference, because the same shareholders are there incentivizing the same behaviors with the same massive salary/stock windfalls. Someone will take the money.
Imagine if money couldn't protect you from the consequences of your choices.
The absolute horror.
Trump took the gutting to an extreme, but antitrust and investor protection agencies have been gutted for decades. The only thing that will draw actual consequences is defrauding or otherwise hurting other rich people - Liz Holmes, Madoff, Epstein or the Dieselgate scandal. But screw over the little man? You'll probably get some sort of bonus.
The idea that you can just magically park your money somewhere and it automagically generates numbers, zero risk (because the government always bails you out, directly or indirectly) and zero knowledge requirement has turned out to be incredibly corrosive to society.