The problem is in fact in the applications. If these support loading secrets from a file, then the problem does not exist. Even with the weak secrets implementation in kubernetes, it is still far better than ENV variables.
The disappointing thing is that in many “selfhost” apps, often the credentials to specify are either db credentials or some sort of initial password, which could totally be read from file or be generated randomly at first run.
I agree that the issue is information disclosure, but the problem is that ENV variables are stored in memory, are accessible to many other processes on the same system, etc. They are just not a good way to store sensitive information.