But Paul does not mean that believers are not expected, indeed required to go on and live holy lives. Christ's unblemished sacrifice is not a substitute for the believer's sacrifice of a holy life but a means by which the believer can be sanctified and so present himself as a living sacrifice. Only Christ's sacrifice atones for human sin, and so the believer's sacrifice is not an atoning sacrifice, but it does involve holiness. Paul does not affirm the notion of purely imputed righteousness. Right standing is a gift of grace, but righteousness as a moral condition is the work of the Holy Spirit within the believer. The righteousness of Christ enables him to be the perfect sacrifice and to offer right standing to all as a gift of pure grace, but the unblemished condition of the believer which is reviewed at judgment is not a legal fiction but the product of progressive sanctification in the actual life of the believer.
A footnote on Colossians 1:22: "21 Once you were alienated from God and were enemies in your minds because of your evil behavior. 22 But now he has reconciled you by Christ's physical body through death to present you holy in his sight, without blemish and free from accusation— 23 if you continue in your faith, established and firm, and do not move from the hope held out in the gospel. This is the gospel that you heard and that has been proclaimed to every creature under heaven, and of which I, Paul, have become a servant."
Ben Witherington III from The Letters to Philemon, the Colossians, and the Ephesians: A Socio-Rhetorical Commentary on the Captivity Epistles, p. 140.