The entire passage leading up to this verse has addressed the difference between earthly, worldly wisdom and heavenly, godly wisdom. For a saved believer, it means acting in accordance with what they claim to believe. Continually choosing worldliness and self-reliance over trusting God in our everyday choices is sinful. There is no reason for us not to take action, since we know what should be done.
We may not be under the law of Moses as a child of God, but we are most certainly under the law of the Spirit of life in Christ Jesus. In James, we find that to know what is good yet act in ways that are evil dishonors the Lord Who bought us with His precious blood and blemishes our testimony for Him. Every day, as children of God, we should live for Christ.
As a Christian, it is our primary objective to live the Christian life in accordance with God's intention and instructions. If we are to remain in holy fellowship with the Father and grow in grace, we must confess our sins to the Lord and address them in our lives.

Dear Heavenly Father, Your word in the book of James informs us that when we know righteous actions yet fail to follow them, we commit a sin in Your eyes. Please forgive me for times when I am aware that something is wrong but still do it anyway, when I avoid doing what is right, or when I turn a blind eye to an urgent need. From now on, I pray that I will not only know what is right but also be ready and willing to carry it out through Your strength and to Your greater glory. 
In Jesus's name I pray. Amen.