Approximately half of the lubricants sold globally find their way into the environment. The need for Environmentally Acceptable Lubricants (EALs) is gaining increased recognition. A lubricant is composed of a base oil and multiple functional additives. The literature has been focused on EAL base oils, with much less attention given to eco-friendly additives. This study presents the tribological performance and aquatic toxicity of four short-chain phosphonium-phosphate and ammonium-phosphate ionic liquids (ILs) as candidate anti-wear and friction-reducing additives for EALs. The results are benchmarked against those of four commercial bio-derived additives. The four ILs, at a mere 0.5 wt% concentration in a synthetic ester, demonstrated a 30-40% friction reduction and >99% wear reduction, superior to the commercial baselines. More impressively, all four ILs showed significantly lower toxicity than the bio-derived products. In an EPA-standard chronic aquatic toxicity test, the sensitive model organism, Ceriodaphnia dubia, had 90-100% survival when exposed to the ILs but 0% survival in exposure to the bio-derived products at the same concentration. This study offers scientific insights for the future development of eco-friendly ILs as lubricant additives.